“Wrongfully and Baselessly”: Tesla Stock (NASDAQ:TSLA) Gains as Tesla Pursues California

Remember when electric vehicle giant Tesla (TSLA) managed to dodge the potential shutdown of sales in California as California regulators took aim at its advertising? Tesla ultimately managed to beat the suit by changing some of its advertising, but now, Tesla is on the attack in California, legally. It is suing the state over filing the lawsuit to begin with. This caught investors’ attention, and sent Tesla shares mounting up over 1.5% in Tuesday afternoon’s trading.

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Tesla is suing the California Department of Motor Vehicles to reverse the ruling from December that Tesla had engaged in false advertising. Tesla noted that the ruling “…wrongfully and baselessly labels Tesla a false advertiser for marketing its industry-leading advanced driver-assistance systems (ADAS) under the brand names ‘Autopilot’ and ‘Full-Self Driving Capability.’”

Tesla changed these names previously to comply with the ruling. However, Tesla insists that it did not get due process out of the hearings that ultimately led to the lawsuit in the first place. Tesla also noted that nothing in the term “Autopilot” would represent something that was “…unambiguously false or counterfactual.” Finally, Tesla asserted that other courts understood that no Tesla system actually qualified as autonomous at the time.

Sliding European Sales

Yesterday we found that Tesla was looking to expand sales of the Model Y L into Australia, and potentially into Europe from there. This may be a helpful point, as we found that Tesla registrations are in open decline throughout the continent.

Word from the European Automobile Manufacturers’ Association was that Tesla had only registered 8,075 vehicles throughout January 2026. That was down 17% from the same time the previous year, and January 2025 had already been regarded as a weak month for Tesla sales to begin with. A hefty drop over a weak month suggests bad news for those involved.

Is Tesla a Buy, Hold or Sell?

Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 12 Buys, 11 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 32.04% rally in its share price over the past year, the average TSLA price target of $396.80 per share implies 2.1% downside risk.

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