Tesla admits millions of cars need hardware upgrades for true FSD

On Wednesday, Tesla CEO Elon Musk confirmed that millions of vehicles sold between 2019 and 2023 will require hardware upgrades to run future versions of Full Self-Driving (Tesla’s driver-assistance software) that do not require human supervision. Speaking on Tesla’s quarterly earnings call, Musk asserted that the current Hardware 3 system—the specific version of the driver-assistance computer installed in these cars—lacks the necessary capability to run the more advanced software. Musk stated, “Hardware 3 simply does not have the capability to achieve unsupervised FSD,” marking a significant shift for owners who purchased vehicles under the assumption that only software updates would be required. Musk admitted that the company will have to upgrade the Hardware 3 computer for customers who purchased the Full Self-Driving package, describing the upcoming upgrade process as painful and difficult, though he asserted that Tesla will get it done.

To manage the scale of these replacements, Musk indicated that Tesla is looking at building micro-factories in major metropolitan areas. The company is considering this approach to avoid overwhelming its existing service centers. Musk explained that performing these upgrades solely at service centers would be extremely slow and inefficient. Instead, the company is looking at setting up dedicated production lines specifically designed to execute the hardware changes across major metropolitan areas.

The admission could open the company up to legal challenges from customers who bought vehicles expecting full autonomy through software alone. This development highlights a shift in Tesla’s internal messaging. Musk previously admitted in January 2025 that Hardware 3 was insufficient to run more advanced versions of the software. However, just six months ago, in October 2025, Tesla Chief Financial Officer Vaibhav Taneja claimed that the company had not completely given up on the hardware, suggesting that Tesla may still be able to make Hardware 3 work for advanced Full Self-Driving. Musk’s latest statements on Wednesday clarify that the older hardware is indeed insufficient for unsupervised Full Self-Driving, creating a clear contradiction with the company’s previous claims.

Why it matters

Tesla’s admission that Hardware 3 vehicles require physical upgrades for future Full Self-Driving capabilities contradicts previous promises that the cars would only need software updates, potentially exposing the company to legal challenges.