Uber intends to continue a self-driving car test program in San Francisco in defiance of a warning from California’s Department of Motor Vehicles that it faces legal consequences for not getting a permit for the project.

State rules “don’t apply” to Uber’s program, Anthony Levandowski, head of the ride-hailing company’s automated vehicle team, said in a conference call on Friday. That’s because Uber has humans behind the wheel at all times monitoring vehicle performance and ready to take over when circumstances are too challenging for the automated system. As a result they aren’t technically autonomous, and little different from Tesla vehicles already sold to consumers.

“Self-driving Ubers that we have in both San Francisco and Pittsburgh today are not capable of driving without active physical control or monitoring,” he said. “It’s hard to understand why the DMV would seek to require self-driving Ubers to get permits when it accepts that Tesla’s Autopilot technology does not need them.”

California’s road safety agency this week said Uber is breaking the law.

“It is illegal for the company to operate its self-driving vehicles on public roads until it receives an autonomous vehicle testing permit,” Brian Soublet, the DMV’s deputy director and chief counsel, said in a letter to Levandowski this week. “If Uber does not confirm immediately that it will stop its launch and seek a testing permit, DMV will initiate legal action, including, but not limited to, seeking injunctive relief.”

Uber’s stance is puzzling given that it risks a legal fight that could quickly become quite costly simply to avoid a $150 state permit, that’s already been issued to 20 auto and tech companies, ranging from Google, Tesla, Ford, Honda and Nissan to tiny startups such as Drive.ai.

Companies that apply for permits are required to share accident data and provide “disengagement” information, detailing when the autonomous system is turned off and a human test driver takes over. The latter requirement helps gauge the level of sophistication of an individual company’s system. By avoiding the permit, privately held Uber may also avoid making information about the performance of its system public.

During the call, Levandowski repeatedly compared the capability of Uber’s test vehicles to Teslas equipped with its Autopilot system. While Tesla intends to deploy fully autonomous vehicles ahead of competitors, it doesn’t describe its technology as “self-driving” but rather semi-autonomous, and the system now disengages if drivers take their hands off the wheel for too long.

Semi-autonomous drive-assist technologies with differing levels of sophistication are widely available from luxury makers, ranging from Mercedes-Benz and BMW to Infiniti and Acura. All require driver engagement. Tesla is also among the companies that holds a permit from California to test autonomous vehicles on public roadways. The company didn’t immediately comment on the matter today.

Uber’s spat erupted Wednesday, shortly after it inaugurated the service in its home city, using a fleet of modified Volvo XC90 SUVs equipped with its latest iteration of sensors and software. Volvo, which touted its involvement with the Uber project this week, didn’t respond to multiple emails and calls seeking comment on the matter.

U.S. regulators in September proposed national guidelines for the development and deployment of prototype driverless vehicles, to coordinate the current hodgepodge of differing state rules. California up to now has had the greatest number of self-driving cars being tested, ever since Google kicked off a race to develop the technology when it began tests in 2009.

Uber intends to be a leader in automated vehicle technology, ultimately replacing its independent-contractor human drivers with vast fleets of robotic cars and trucks to provide both commuting and commercial delivery services. CEO Travis Kalanick and his plan for Uber to dominate the mobility market are profiled in the current issue of Forbes.

As the spat with regulators broke out Wednesday, the San Francisco Examiner posted a video that appeared to depict one of the company’s self-driving Volvos running a red light. Uber told the Examiner it was reviewing the incident, adding that “safety is our top priority.”

Aside from conceding to California’s demand that it simply get a permit, Uber could defuse the situation by not calling its test vehicles “self-driving” (and given that each has two humans in front, along with a robotic system, there’s little to support that description).

For now, neither action appears likely, ensuring that the battle is about to escalate.