Sacramento, California - Elon Musk's Tesla could face a 30-day sales ban in the California after a court found the company overstated the capabilities of its "autopilot" driver-assistance system.

California's Department of Motor Vehicles (DMV) said on Tuesday it had delayed enforcement by 60 days to allow Tesla to make changes. If it fails to do so, the agency said it would suspend its dealer license in the state for 30 days.

Tesla sold around 135,500 vehicles in California in the first nine months of the year, down 15% from a year earlier, according to dealer group estimates, ranking third behind Toyota and Honda. Tesla's main California plant is located in Fremont, near San Francisco.

The court also proposed suspending Tesla's manufacturer license in the state for 30 days, though the DMV said that measure has been put on hold indefinitely.

The naming and marketing of Tesla's autopilot system, and in particular its "Full Self-Driving" (FSD) capability – pushed heavily by Musk – have long been controversial. Despite the name, FSD does not make a Tesla fully autonomous. Drivers must still remain alert and be ready to take control of the vehicle at any time.

Investigators have said many drivers relied too heavily on autopilot, which has been at the center of several lawsuits over deadly crashes.

Tesla has since rebranded the current system as "Full Self-Driving (Supervised)."

Only a future version labelled "Unsupervised," which has not yet been rolled out, is intended to enable fully autonomous driving.