Tesla to Retrofit HW3 Cars via Urban Microfactories
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- Elon Musk admitted on Tesla's quarterly conference call that HW3 has only 1/8th the memory bandwidth of HW4, making it 'simply' incapable of achieving unsupervised FSD
- Tesla is proposing to build 'microfactories' in major metropolitan areas to retrofit HW3 vehicles, replacing both the computer and cameras to upgrade them to HW4
- Tesla sold millions of vehicles with HW2 and HW3 on the promise of full self-driving, with FSD software priced up to $15,000 — some cars have now been waiting nearly a decade
- Tesla previously offered free HW2-to-HW3 upgrades for FSD owners but charged $1,500 to FSD subscribers for the same hardware swap
- Tesla warned it won't be cash-flow positive for the rest of the year as it increases capex to keep pace with AI industry spending
- Tesla will release a V14 version of FSD for HW3 in June, though it acknowledged the software arrives later and performs worse than on HW4
- Some HW3 owners have already won legal action against Tesla for failure to deliver the autonomous software they paid for
Why it matters: Tesla is on the hook to retrofit millions of cars it sold on an autonomy promise it cannot keep, and the 'microfactory' plan arrives the same quarter Tesla warned investors of negative cash flow — putting a concrete dollar cost on years of overselling FSD and raising the question of whether HW4 itself will eventually prove insufficient too.
