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• Goldman said the ruling gives Tesla time to comply and maintained its Neutral rating and $400 target.
• Any sales suspension would occur only if Tesla fails to change its Autopilot marketing.
• Tesla said California sales will continue uninterrupted.

Tesla was back in the regulatory spotlight on Wednesday after a California ruling challenged how the company markets its Autopilot system, though Goldman Sachs said it does not expect the decision to disrupt Tesla’s business in the state.

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Tesla shares pulled back on Wednesday, snapping three consecutive sessions of gains to fall nearly 3% at the time of writing. The decline followed a strong rally earlier in the week that had pushed the stock to fresh record highs.

Goldman’s View

In a research note, Goldman Sachs analyst Mark Delaney told investors that the firm does not expect any disruption to Tesla’s business in California following reports that the company could face a temporary suspension of vehicle sales.

The potential suspension would apply only if Tesla does not change how it is marketing its Autopilot system. Goldman said the ruling gives Tesla time to come into compliance and noted that the company has previously changed or used alternative names when marketing its advanced driver-assistance (ADAS) features.

Based on those factors, Goldman maintained its ‘Neutral’ rating on Tesla shares and reiterated its $400 price target.

What The California Ruling Says

The order results from a 2023 complaint by the California Department of Motor Vehicles against Tesla, claiming the company's use of the terms "Autopilot" and "Full Self-Driving" to market its ADAS technology was misleading advertising. The administrative law judge agreed with this assessment and ruled the language to be in violation of state law.

The order gives Tesla 60 days to appeal or adjust its marketing tactics. If the company refuses to cooperate, it risks having its dealer license in California suspended for 30 days, during which it can't sell vehicles in the state.

California was once Tesla’s home base before the company relocated its headquarters to Texas in 2021. Despite the move, the state remains an important market, accounting for just over 10% of Tesla’s U.S. vehicle sales in the third quarter, even as registrations have declined year-over-year for eight straight quarters.

Tesla’s Response

In a post on its North America X account, Tesla said the order was a “consumer protection” action focused on the use of the term “Autopilot,” adding that no customers had come forward to raise concerns. The company also said vehicle sales in California will continue uninterrupted.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment for Tesla was ‘bullish’ amid ‘high’ message volume.

One user said long-term Tesla holders remain confident, suggesting patience could be rewarded with further upside and eventual exposure to SpaceX-related equity.

Another bearish user said, “its obvious the selloff market wise is a large position/hedges, selling off dropping the market entirely but setting themselves up for next year.”

Tesla’s stock has risen 18% so far in 2025.

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