- Elon Musk says Tesla will need to build "micro factories" to retrofit old cars with new FSD-capable hardware.
- This involves swapping out the car's Autopilot computer and cameras.
- Without the upgrade, millions of Tesla vehicles sold between 2019 and 2023 won't be able to achieve unsupervised Full Self-Driving.
Tesla has long treated Full Self-Driving like a software problem. Just wait for the next upgrade, which will seemingly always be here by the "end of the year"—with the magic of over-the-air software update and enough time, the predictions will eventually come true. There's just one issue: Tesla has admitted that there's also a hardware problem.
Specifically, its previous-generation Hardware 3 platform, which is what underpins the autonomy stack in millions of Tesla vehicles sold between 2019 and 2023. After years of promising that all Teslas sold had the hardware capable of achieving Full Self-Driving, Tesla now says that it will need to set up micro factories to retrofit some of these cars—but only if the owners purchased FSD.
"Unfortunately, HW3 simply does not have the capability to achieve unsupervised FSD. We did think at one point it would have that," said Musk during Tesla's Q1 earnings call on Wednesday evening. Musk continued:
"For customers that have bought FSD, what we're offering is essentially a discounted trade-in for cars that have AI4 hardware. And we'll also be offering the ability to upgrade the car to replace the computer, and you also need to replace the cameras, unfortunately, to go to Hardware 4."
Previously, Tesla said that this sort of retrofit wouldn't be feasible. Musk then later admitted that Tesla would likely have to upgrade cars, but the process to do so would be “painful and difficult” during the company's fourth quarter earnings call in 2024. He also quipped that he was “kind of glad that not that many people bought the FSD package.”
But for those who did buy it, Tesla's least painful fix is apparently a bunch of mini factories around the U.S. to do the work:
To do this efficiently, we're going to have to set up micro factories, or small factories, in major metropolitan areas. Because if it's done just at the service center, it is extremely slow and inefficient.
We basically need mini production lines to make the change. I think over time it's going to make sense to convert all Hardware 3 cars to Hardware 4 because that's what enables them to enter the Robotaxi fleet and have unsupervised FSD.
Where the lines get blurry is that Musk specifically addressed the customers who bought FSD—the very same that he joked about there being few of. Those who subscribed to Tesla's FSD software or bought a HW3-equipped vehicle with the intention of subscribing once unsupervised FSD became available were left out.
See, back in 2016, Tesla wrote in a now-deleted blog post that all of its vehicles were being shipped with "the hardware needed for full self-driving capability"—note the lack of capitalization in Tesla's wording versus how it stylizes Full Self-Driving (the software), which could open the argument that Tesla was referring to the capability of the car.
But now Tesla's commitment is only to upgrade owners who have actually purchased the full $8,000 software outright, and not those who purchased a HW3-equipped car in late 2022 when FSD became available as a subscription. Now, only after Tesla removed the option to purchase FSD outright, has it fully recognized the problem and revealed its plan together.
Musk later said that it might make sense to upgrade all cars so that they could become part of the Robotaxi fleet.
Those who purchased a Hardware 4-equipped car may also be sweating a bit after the earnings call, too. After admitting that memory bandwidth was the largest chokepoint that was holding HW3 back, he also said Tesla was preparing an upgrade for HW3 called "AI4" or "AI4-plus" which upgrades the available memory from 32 Gigabytes of RAM split across its chips to 64 GB.
Musk said that this upgrade will go into production next year after Samsung wraps up the changes it's making to the hardware involved in the upgrade.
"It's looking like we're going to be able to achieve unsupervised self-driving with HW4," said Musk.
Tesla's failed promises of Hardware 3 leave a lot to unpack. The automaker says it's making good on its promise, but only for the subset of cars that paid for software that Tesla has already stopped selling. And in order to upgrade those cars, Tesla still needs to set up a bunch of mini factories. There's also no clear timeline on the fix, even as the first HW3-equipped cars turn seven years old this month.
There's no dancing around the fact that Tesla has its work cut out for it. But owners of cars are undoubtedly going to feel left behind.
