Tesla strategically discontinued its Autopilot driver-assistance system, a move designed to drive wider adoption of its more advanced Full Self-Driving (Supervised) software. The decision arrives as the electric vehicle manufacturer navigates a challenging regulatory landscape, including a 30-day suspension of its manufacturing and dealer licenses in California, its largest U.S. market.

The California Department of Motor Vehicles (DMV) initiated the license suspension following a December ruling where a judge determined Tesla engaged in deceptive marketing practices by exaggerating the capabilities of both Autopilot and FSD over several years. The DMV stayed the ruling for 60 days, providing Tesla an opportunity to comply by ceasing the use of the Autopilot name.

Autopilot, previously a standard feature, combined Traffic Aware Cruise Control, which maintains a set speed and distance from preceding vehicles, and Autosteer, a lane-centering system capable of navigating curves. Tesla's online configurator now indicates that new vehicles will only include Traffic Aware Cruise Control as a standard feature. The impact on existing Tesla owners with Autopilot remains unclear.

This strategic shift occurred one week after Tesla announced it would eliminate the $8,000 upfront fee for FSD, starting February 14. The company is moving toward a subscription-based model for FSD, aiming to lower the barrier to entry and increase its user base.

The discontinuation of Autopilot and the shift to a subscription model for FSD represent a significant strategic pivot for Tesla. By simplifying its driver-assistance offerings and focusing on FSD, Tesla aims to increase revenue from software subscriptions. The company faces the challenge of overcoming the negative publicity generated by the deceptive marketing ruling. The success of this strategy hinges on Tesla's ability to demonstrate the value and reliability of its FSD software, while navigating regulatory scrutiny and competition in the rapidly evolving autonomous driving market.