Tesla CEO Elon Musk has once again addressed the future of Hardware 3 (HW3/AI3) vehicles, and this time his comments suggest the company’s upgrade plans have evolved.
During Tesla’s Q2 2026 earnings call on Wednesday, Musk indicated that rather than retrofitting eligible vehicles with Hardware 4 (HW4/AI4), Tesla may instead skip directly to its next-generation AI computer once it becomes available.
The comments came in response to a question from Truist Securities analyst William Stein, who asked whether Tesla still planned to upgrade HW3 vehicles to HW4 so they could continue running future versions of Full Self-Driving (FSD).
Rather than confirming a direct upgrade path to HW4, as has been previously suggested, Musk revealed Tesla is now looking further ahead.
“I think it’s going to make sense to upgrade all cars that have less than Hardware 4…almost any cars that have cameras basically,” Musk said.
According to Musk, Tesla believes it will eventually become “financially sensible” to upgrade camera-equipped vehicles. However, by that point the company expects to have hardware that is more capable than today’s HW4 computer.
“I think we want to upgrade them to the next generation AI board,” Musk explained, adding that Tesla is working on both an intermediate chip offering a “moderate improvement over [HW4]” and its much more powerful AI5 processor.
Musk said both the intermediate AI board and AI5 could begin reaching production around the middle of 2027, although AI5 will initially be prioritized for Optimus.
The comments represent another shift in Tesla’s messaging around Hardware 3 upgrades. During previous earnings calls, as recently as the Q1 2026 call, Musk said Tesla would provide free upgrades to HW4 or HW4.5 for customers who purchased FSD if required. He even suggested Tesla might need dedicated “microfactories” to handle the retrofit work. Now, the company appears to be looking beyond HW4 altogether.
While Tesla has never committed to a timeline for these upgrades, these latest comments indicate owners shouldn’t expect them anytime soon. Instead of discussing a near-term rollout of retrofits, Musk focused on future AI computers that are still in development and not expected to enter production until at least mid-2027, and even then would be prioritized for Optimus and not for vehicles.
The company now appears more interested in waiting for its next generation of AI hardware than deploying today’s HW4 computer, suggesting any retrofit program is still years away. If that timeline holds, many original HW3 owners may no longer own their vehicles by the time a retrofit program eventually begins.
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