A California judge ruled Tesla will face a 30-day suspension of its licenses to produce and sell vehicles in the state, causing Tesla shares to drop slightly. The suspension is related to Tesla’s marketing of its Autopilot and full self-driving software. The California DMV will pause enforcement for 60 days to allow Tesla to address marketing claims.

The California plant is Tesla’s second-largest in the US, with the company selling more vehicles in California than any other state. While the suspension could have a significant near-term financial impact, Tesla expects sales in California to continue uninterrupted. Analysts predict Tesla will adjust its marketing to avoid the suspension without any impact on the company.

Despite the suspension, analysts maintain a $300 fair value estimate for Tesla, considering the stock overvalued with prices trading more than 60% above the estimate. Forecasts show declining US deliveries in Q4 and early 2026 due to the expiration of the US EV tax credit. Market optimism for Tesla’s autonomous driving software may be leading to an overly high valuation.

Read more at Morningstar: Tesla: We See Little Effect From California Ruling to Suspend Production and Sales for 30 Days