In a letter that was initially published in the Bild am Sonntag newspaper (link in German, subscription needed), the KBA said that the "misleading term" should not be used "to avoid misunderstandings and false customer expectations".
Tesla rejected this, saying that "we have great confidence in our German customers and none are known to have misunderstood the meaning", Bild.de reported (link in German).
The company has always stressed that the driver must monitor and control the vehicle, just as in the use of autopilot systems in aviation, Tesla said, according to Bild.de.
The KBA also wrote to owners of Tesla cars to say that their vehicles must not be operated without constant attention, Reuters reported.
In May, the Association of British Insurers said motorists will need to remain alert behind the wheel until vehicle driving becomes fully automated.
A driverless car was tested in public spaces in the UK for the first time last week. A trial of the vehicle, named Selenium, took place in Milton Keyes on pavements around the town's train station and business district.
Earlier this year the UK government said it plans a "rolling programme of regulatory reform" to support the adoption of autonomous vehicles. It has identified changes to motor insurance and road traffic laws as among its initial priorities which were outlined in a consultation published by the government's Centre for Connected and Autonomous Vehicles (C-CAV). The government has already established a code of practice for testing driverless cars in the UK.
A UK parliamentary inquiry is currently looking into the potential uses and benefits of autonomous vehicles.