Tesla (TSLA) has to replace computer in ~4 million cars or compensate their owners
Tesla (TSLA) has to replace the ‘self-driving’ computer inside about 4 million vehicles or likely compensate the owners of those vehicles.
The liability could be more significant than the largest automotive recall in terms of cost.
In 2016, Tesla claimed that all its vehicles in production going forward have “all the hardware necessary for full self-driving capability.”
Tesla’s use of the term “full self-driving” has changed over the years, but at the time and for years later, CEO Elon Musk claimed that it would mean Tesla owners would eventually receive a software update that would turn their vehicles into “robotaxis” capable of level-4-5 self-driving, which means unsupervised autonomous driving even with no one in the cars.
Almost 10 years later, this has yet to happen and won’t happen soon in most of the cars Tesla has delivered over the last decade.
Tesla’s claim that its vehicles have “all the hardware necessary for full self-driving capability” quickly proved untrue.
At the time, Tesla was producing its vehicles with cameras, a front-facing radar, ultrasonic sensors, and a “self-driving” computer, called HW2.5.”
Tesla quickly started building new vehicles with a new “HW3 self-driving computer” and admitted that its HW2.5 computer was not powerful enough to achieve self-driving capability.
The automaker started retrofitting existing HW2.5 vehicles for free with new HW3 computers owned by drivers who bought Tesla’s ‘Full Self-Driving’ (FSD) software package.
In 2023-2024, Tesla transitioned to another new and more powerful “self-driving computer”, HW4, in its new vehicles.
Unlike when it transitioned from HW2.5 to HW3, this time, Tesla claimed it would still be able to deliver its robotaxi self-driving capability to HW3 vehicles.
Musk even claimed that FSD will get better on HW3 first, as Tesla’s “focus needs to be on getting FSD on HW3 working super well and provided internationally”. He went as far as claiming that FSD performance on “HW4 will lag at least 6 months behind HW3” because of this.
That didn’t last long.
In 2024, we started to report that Tesla was reaching the limits of the HW3 computer, while the capabilities were nowhere near the promised unsupervised robotaxi-level autonomous driving.
It took another 6 months, but in January 2025, Musk finally admitted that HW3 computers are not powerful enough to achieve unsupervised self-driving capability.
There are about 4 million Tesla vehicles in the world with HW3 computers:
| Hardware Version | Production Timeframe | Estimated Vehicles Produced (Global) | Rollout & Overlap |
|---|---|---|---|
| HW3 (FSD Computer) | Apr 2019 – Late 2023 (phased out) | ~4 million (approx.) | Standard in all models from 2019–2022; remained in some cars through 2023. Overlap with HW4 during 2023. |
| HW4 (FSD Computer) | Jan 2023 – Present (ongoing) | ~2.5–3 million (approx.) | Introduced Jan 2023 (S/X first); became standard across all models by early 2024. Overlapped with HW3 in 2023. |
When admitting the computer won’t support the promised self-driving capabilities, Musk said that Tesla would retrofit the computers of all HW3 car owners who purchased the FSD package:
I mean, I think the honest answer is that we’re going to have to upgrade people’s Hardware 3 computer for those that have bought full self-driving, and that is the honest answer and that’s going to be painful and difficult but we’ll get it done. Now I’m kind of glad that not that many people bought the FSD package.
Musk says that replacing all the computers will be “painful,” and he is “glad” that “not that many people bought the FSD package.”
Tesla never disclosed the official take rate of its Full Self-Driving (FSD) package, but it did disclose having 400,000 FSD beta testers in North America by the end of 2022.
The take-rate is believed to be much lower globally due to the limited value in other markets where Tesla offers fewer ADAS features under the FSD package.
Globally, it’s safe to assume at least another 100,000 HW3 vehicles with the FSD package, which should bring Tesla’s retrofit requirement to over half a million units.
Musk is right to say that replacing the computers in over 500,000 Tesla vehicles will be “painful.” It will strain its service capacity tremendously, on top of the cost, which will easily surpass $500 million.
But that might just be the beginning.
Tesla promised self-driving hardware in all cars
Musk and Tesla not only made promises to those who bought the FSD package, but they promised anyone buying Tesla vehicles since 2016 had “all the hardware necessary for full self-driving capability.”
As we previously reported, Tesla removed the claim from its website last year and changed the language around the FSD package, which was likely aimed at weakening claims for Tesla HW4 owners, but the case for HW3 owners is more straightforward.
In 2019, Musk claimed “Tesla vehicles are now appreciating assets” because of their future self-driving capabilities. Of course, this proved to be completely wrong.
But there’s one thing that’s true about the value of Tesla vehicles: they would be worth more if they had computers capable of supporting self-driving, which Musk just admitted is not the case. That’s regardless of whether they bought the FSD package or not.
Therefore, there’s a strong argument to be made that Tesla needs to replace computers in all HW3 cars or at the very least, compensate the owners for falsely claiming that the vehicles had “all the hardware necessary for self-driving.”
In fact, there’s already legal precedent for this.
In 2022, a judge ordered Tesla to upgrade a customer’s self-driving computer for free so that they can subscribe to Tesla’s Full Self-Driving program without any additional cost. It created a precedent for Tesla owners who don’t purchase the FSD package.
Based on Tesla’s statement that “all cars produced since 2016 have the hardware necessary for full self-driving capability,” the owners of those vehicles need to have all the hardware necessary to have access to these features.
It’s a clear case of false advertising. Tesla says, “Your car has all the hardware necessary for full self-driving,” and when an owner wants to try the features, Tesla tells them, “You have to pay $1,000 for us to upgrade your hardware.” Something doesn’t add up.
Electrek’s Take
I would be surprised if Tesla does as Musk claimed and replaces HW3 computers in any car, let alone over half a million cars, or as it should be, about 4 million vehicles.
It’s too complicated and costly. It would add hundreds of thousands of work hours to Tesla’s already ultra-busy service operations, and it may not even work.
After being wrong about HW2.5 and HW3, the level of confidence in Tesla achieving unsupervised self-driving on HW4 vehicles is not really high, despite HW4 vehicles not only having more powerful computers but also better cameras.
I don’t think it’s realistic to believe that Tesla will enable level 4 or 5 self-driving capabilities in what are, in some cases, almost 10-year-old vehicles through a computer retrofit.
My 2018 Model 3 Performance was originally a HW 2.5 vehicle, and I purchased the FSD package. Tesla upgraded my computer to HW3 in 2019. We are now in 2025, and Musk finally admitted that the computer I bought 6 years ago won’t enable the self-driving capacity I was promised.
My car will never be self-driving, and I don’t believe Tesla will ever offer a free computer upgrade.
I think Tesla will have to compensate every Tesla HW3 owner worldwide. That would mean about 4 million vehicles and a liability of several billion dollars.
At first, instead of the computer retrofit, I think Tesla will use this as an opportunity to encourage people to upgrade, like it did with the “FSD transfer windows.” Maybe it will offer buybacks at a higher rate to compensate owners.
As for those who didn’t buy the FSD package, I don’t think Tesla will offer anything based on Musk’s messaging. It will have to go through the courts.
There are already several lawsuits filed against Tesla over its self-driving claims, and that was before Musk’s admission that HW3 won’t support unsupervised self-driving. I believe that those lawsuits will ramp up this year.
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Elon Musk went on an all-day Tesla self-driving propaganda spree ahead of the company’s earnings, which are expected to be rough.
It’s well known these days that Musk doesn’t often comment on Tesla as he is busy with his government work, buying elections, and running several private companies.
Some Tesla shareholders argue that the CEO is neglecting the public company, which saw its stock tumble this year.
That wasn’t the case today.
Musk went on a tweeting spree about Tesla, specifically about Tesla’s self-driving effort.
Here are some of the highlights:
Tesla posted that “one day” its vehicles will drive themselves from the factory to new customers and Musk couldn’t stop himself and had to say that it will happen “this year”:
Like most of Musk’s self-driving comments, this one is hard to take seriously since he said the exact same thing in 2018 and claimed it would happen in 2019.
The tweet he was responding to has been deleted by the author, but it asked when Tesla vehicles would drive themselves to customers:
Spoiler alert: regulators are not the bottleneck here.
Musk then claimed that “Tesla self-driving will be far safer than human driving”:
The problem here is that Musk has claimed on many occasions that Tesla’s FSD is already safer than humans, like in 2023: “Supervised FSD is vastly safer than human driving.”
There’s no data that supports that. Tesla refuses to share any data regarding its self-driving program and instead, the company shares a very misleading quarterly “safety report.”
Considering Tesla’s FSD requires supervision from a driver at all times, the driver’s supervision and attention help reduce accidents that the self-driving system wouldn’t necessarily prevent.
Musk also shared positive experiences of a few Tesla owners, including a Tesla engineer and Joe Rogan:
As we often highlight, Tesla’s FSD can be impressive to use, but the problem is when you compare it to its promise, which is in the name: full self-driving.
Under its current form, FSD is still a level 2 advanced driver assist system, and not self-driving, but Musk said that it would become truly “unsupervised” self-driving every year for the last 8 years.
Therefore, it’s not what Musk has been promising buyers for years and as for when it is coming, he has been consistently wrong and has asked owners to rely on anecdotal experiences as Tesla refuses to release any data.
We previously reported that Musk has twice positively referred to a crowdsourced Tesla FSD dataset that shows Tesla’s FSD v13 on HW4 is achieving fewer than 500 miles between critical disengagements.
Tesla has previously stated that FSD must achieve 700,000 miles between critical disengagements to be safer than humans.
The spree of Tesla FSD tweets comes as Tesla is preparing to report its Q1 2025 earnings next week, which should be difficult after the automaker reported its lowest delivery results in three years.
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Texas is No. 1 in the US for wind and solar capacity, but the Texas Senate just passed a bill that aims to kneecap clean energy with an industry-killing review process. Will the Texas House pass it, too?
The Texas Senate today passed SB 819, which creates new restrictions on the development of wind and solar energy under the guise of “protecting” wildlife. The restrictions don’t apply to any other forms of energy.
Texas uses an extraordinary amount of power, and renewables play a big part in supplying that power. The Texas Tribune reported in March that “ERCOT [the Texas grid] predicts that Texas’ energy demand will nearly double by 2030, with power supply projected to fall short of peak demand in a worst-case scenario beginning in summer 2026.” That’s because of extreme weather, population growth, and crypto-mining facilities.
As of February, Texas increased its energy supply by 35% over the last four years, and 92% of that supply came from solar, wind, and battery storage.
Solar is the largest source of energy generating capacity that has been added to the Texas grid. That’s because it’s cost-effective and it can be deployed quickly. So if new solar projects are kneecapped, power demand will outstrip supply in the Lone Star State.
Daniel Giese, Solar Energy Industries Association (SEIA)’s Texas director of state affairs, stated after the Senate’s vote, “With energy demand rising fast, Texas needs every megawatt it can generate to keep the lights on and our economy strong. We cannot afford to turn away from the pro-energy and pro-business policies that made the Lone Star State the energy capital, but that’s exactly what SB 819 does. We urge the Texas House to reject this bill.”
Less clean energy would also jack up electricity bills for Texans, and rural areas would lose billions in landowner revenue and tax payments. Every time a wind farm or solar farm is installed on rural land, it brings a lot of money to the community that surrounds it. A January report estimated that existing and planned solar, wind, and battery storage projects will contribute $20 billion in local tax revenue and $29.5 billion in landowner payments.
What’s especially baffling about this bill is that it flies in the face of a core Texas value – keeping the government out of private property decisions – yet it does precisely the opposite.
Environment Texas executive director Luke Metzger issued the following response: ‘By making it much more difficult to build wind and solar energy in Texas, this bill threatens to increase pollution, increase blackouts and increase our electric bills.
“Under the guise of helping land and wildlife, SB 819 would create a discriminatory and capricious permitting standard that could grind renewable energy development to a halt.
“We urge the House of Representatives to reject this bill and instead support policies that promote a cleaner, more sustainable energy future for all Texans.”
It will come as no surprise to regular readers that I find this bill ludicrously masochistic. Let me know your thoughts in the comments below, and please keep it civil.
Read more: A vast 600 MW Texas solar farm just hit a major milestone [update]
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