Tesla Faces Critical 60-Day Marketing Mandate Amid Legal Victory

Tesla navigated a pivotal week defined by contrasting legal outcomes: a significant win in a Delaware courtroom and a stringent regulatory mandate from California. These developments present a dual narrative for the electric vehicle giant, resolving one major uncertainty while imposing a new, time-sensitive challenge.

Following a court ruling concerning misleading advertising, the California Department of Motor Vehicles (DMV) has delivered a firm directive to Tesla. The company now has a 60-day window to revise its marketing language for the "Autopilot" and "Full Self-Driving" (FSD) systems.

The Core Requirement: Tesla must make it unequivocally clear that these are driver-assistance features, not autonomous vehicle functions.

Potential Penalty: Failure to comply with these stipulations could result in a 30-day suspension of Tesla's dealer license within the state. California represents the company's largest U.S. market. While an immediate suspension was not enacted, the countdown for corrective action has begun.

Delaware Court Reinstates Landmark CEO Compensation

In a separate but consequential ruling, Delaware's Supreme Court decided on Friday to uphold the 2018 compensation package awarded to CEO Elon Musk. Valued at approximately $56 billion, this agreement had previously been voided by a lower court, a decision that has now been overturned.

This verdict removes a substantial overhang for Tesla, securing Musk's long-term incentives and tying his financial rewards directly to the company's performance. Analysts view this as particularly crucial for the advancement of key strategic initiatives like the full self-driving technology and the Optimus humanoid robot project.

Should investors sell immediately? Or is it worth buying Tesla?

Market Analysts Express Divergent Views

Equity researchers have offered mixed interpretations of these developments. Deutsche Bank reaffirmed its "Buy" recommendation, setting a price target of $500. The bank cited the resolved compensation dispute as a stabilizing factor for corporate governance. Similarly, Cantor Fitzgerald maintained an "Overweight" stance with a $510 target, driven by long-term expectations for the Cybercab and Optimus projects anticipated around 2026.

In contrast, Truist Securities holds a more cautious "Hold" rating with a $444 price target, pointing to persistent risks surrounding the rollout of autonomous driving capabilities.

Operational Challenges Emerge

Beyond the legal headlines, operational signals are prompting investor caution. In the Netherlands, leasing firm Mistergreen has filed for bankruptcy. The company, which operated an all-Tesla fleet, cited the steep depreciation of the vehicles as a primary reason for its collapse.

Furthermore, a bulk purchase of over 1,000 Cybertrucks by SpaceX in December—estimated to be worth $80 to $160 million—has raised questions about genuine retail demand for the vehicle. Reports suggest retail sales of the Cybertruck may have plunged by 62.6 percent in the third quarter of 2025.

Valuation and the Path Forward

Trading with a market capitalization near $1.6 trillion and a price-to-earnings ratio exceeding 320, Tesla's valuation remains exceptionally ambitious. The Delaware ruling alleviates one layer of uncertainty. However, the 60-day clock ticking in California, coupled with operational concerns regarding vehicle depreciation and Cybertruck demand, is reshaping the risk-reward profile for the company as it moves toward 2026.