Owners who subscribed to the FSD package might face retrofit costs ranging from $1,000 to $3,000, although exact figures remain unclear.
This announcement has raised concerns, as Tesla had previously asserted that all cars produced since 2016 were capable of full self-driving, not just those who opted for the FSD package.
The HW4 computer, which is being shipped with newer models, is not retrofittable to HW3 vehicles, necessitating the design of a new retrofit solution.
With millions of HW3-equipped Teslas on the road, the company risks facing legal challenges regarding hardware upgrade costs and eligibility if they do not provide upgrades as initially advertised.
In 2024, Tesla set a record by delivering over 2 million vehicles, although production has been constrained by battery supply issues.
The Model Y was declared the best-selling car globally in 2024, with strong sales in China leading up to the release of the new model in January 2025.
The earnings call highlighted Tesla's future direction, including advancements in FSD, Robotaxi services, and the development of the Optimus humanoid robot.
Musk expressed optimism about Tesla's potential to become the most valuable company in the world, driven by advancements in autonomy and AI technology.
Musk acknowledged the challenges associated with the upgrade process, stating it would be 'painful and difficult,' but emphasized the company's commitment to completing it.
Despite the focus on Hardware 4, Tesla has not abandoned FSD software development for HW3, with ongoing updates being released for these vehicles.
During Tesla's recent Q4 earnings call, CEO Elon Musk revealed that owners of Hardware 3 (HW3) vehicles who purchased Full Self-Driving (FSD) packages will need to undergo hardware upgrades.
Musk's latest admission contradicts earlier claims that HW3-equipped Tesla cars were future-proof for FSD capabilities.
