Tesla Inc. CEO Elon Musk has confirmed that vehicles equipped with Tesla’s Hardware 3 (HW3) chip will not achieve Unsupervised Full Self-Driving (FSD). This news was announced during the company’s first quarter 2026 earnings call.
HW3 Won’t Achieve Unsupervised Autonomy
Musk shared that Tesla would offer a discounted trade-in for cars that have AI4. He also stated that Tesla would offer customers the choice to upgrade the chip and cameras on HW3 vehicles. To facilitate this, Musk plans to set up micro factories in major metro areas, which would make it possible to convert all HW3 cars to HW4.
Additionally, Tesla will offer a “distilled” version of the FSD v14 to HW3 owners. This alternative solution is intended to provide a compromise for customers who were expecting unsupervised FSD capabilities.
Criticism from Investors
Following the announcement, investor Ross Gerber of Gerber Kawasaki expressed his disappointment on social media. Gerber criticized the move, stating that all HW3 customers are “screwed” and that the liability for Tesla could be in the billions. He had previously demanded a $10,000 refund if the latest v14.3 FSD system failed to offer unsupervised autonomy.
Tesla’s Earnings Call
Tesla reported its earnings after the market close on Wednesday, with first-quarter 2026 revenue of $22.71 billion, up 16% YoY. The company also reported earnings per share of 41 cents, beating market estimates of 37 cents per share.
Price Action
TSLA declined 0.31% to $386.30 in the after-hours trading session on Wednesday. According to rankings, Tesla offers satisfactory Momentum, but poor Value, with a favorable price trend in the Long term.
Future Developments
As the situation continues to unfold, it remains to be seen how Tesla will address the concerns of its customers and investors. One thing is certain, however: the company’s commitment to innovation and customer satisfaction will be put to the test in the coming months.