Tesla Inc CEO Elon Musk has announced that the company will likely have to update hardware for customers whose vehicles are equipped with an older version of the AI hardware called Hardware 3, in order to achieve fully unsupervised autonomous driving with full self-driving (FSD) driver assistance software.
What Happened
Musk stated that the company will have to upgrade people’s Hardware 3 computer for those that have bought full self-driving, which he acknowledges will be a painful and difficult process. However, Musk also expressed relief that not many people bought the FSD pack, saying “I’m kind of glad that not that many people bought the FSD pack.”
Current Status of Hardware 3
Another Tesla executive stated that the company has not yet given up on Hardware 3. Recent versions of Tesla’s FSD were rolled out to vehicles with hardware 4 first and hardware 3 vehicles later, raising doubts about the capacity of hardware 3 to support unsupervised versions of the software.
Why It Matters
Musk had previously expressed uncertainty about hardware 3’s capability for fully autonomous driving, stating that “Hardware 4 has really several times the capability of Hardware 3. It’s easier to get things to work with. Then it takes a lot of effort to sort of squeeze that functionality into Hardware 3.” Musk also mentioned that there is a likelihood that Hardware 3 does not achieve the safety level that allows for unsupervised FSD.
Free Upgrade for Customers
Musk announced that the company will upgrade the hardware for those who bought FSD on hardware 3 vehicles, free of cost to customers. This upgrade will allow buyers to retain value for the $8000 they spent to purchase FSD capability, instead of making a new vehicle purchase.
Financial Results
For the fourth quarter, Tesla reported operating expenses of $2.60 billion, marking an increase of 9% year-on-year. The company also warned that it expects operating expenses to increase in 2025 as it seeks to support its “growth initiatives.” Additionally, Tesla reported a capital expenditure of $11.34 billion for the entirety of 2024, up from $8.9 billion in 2023.
Stock Performance
Despite reporting fourth-quarter revenue and earnings below estimates, Tesla’s stock rose as much as 5% after-hours on the company’s promises of launching new models in the first half of the year, as well as other promises regarding the deployment of autonomous vehicles.