Tesla has provided more details on how it plans to deal with owners of older Hardware 3 (HW3) vehicles that have purchased Full Self-Driving (FSD).
The new details were shared during Tesla’s Q1 2026 earnings call, where CEO Elon Musk addressed a question about whether HW3 vehicles will ever be capable of achieving unsupervised autonomy.
Tesla has addressed this before, so the answer was unsurprisingly, no. HW3 “simply does not have the capability to achieve FSD unsupervised,” he said, confirming that the memory bandwidth of HW3 is the biggest obstacle leading to HW3 being obsolete.
Hardware Upgrades and Trade-In Incentives
However, new details were also provided. According to Musk, the company is planning to offer a hardware upgrade path from HW3 to its newer AI4 system. While this detail was already known, Musk confirmed for the first time the upgrades will include new cameras, as well as a more powerful Autopilot computer.
At the same time, Musk said Tesla will also introduce discounts when HW3 owners trade-in to upgrade to a newer vehicle rather than retrofit their existing one.
The one big detail missing from this part of the plan was whether HW3 owners will be able to transfer their FSD license to the new car, or if they will be forced to abandon it and subscribe to FSD on a monthly basis. We’d like to think it is the former and not the latter, but it is not as straightforward after Tesla switched to a subscription-only model earlier this year.
Microfactories to Handle Retrofit Demand
One of the more interesting pieces of information from the call was Tesla’s plan to establish dedicated “microfactories” in major metropolitan areas to handle retrofit work.
Musk said that instead of relying solely on its existing Service Centre network, Tesla intends to move upgrade operations to these specialized facilities, allowing for more efficient and higher-volume installations of the new hardware.
If implemented successfully, this could significantly reduce wait times and streamline what would otherwise be a complex and labour-intensive upgrade process across millions of vehicles globally. But that is a big if.
V14 Lite as the Interim Solution
While hardware upgrades are still in development, Tesla is not leaving HW3 owners behind in the short term. As we told you earlier today, the company reiterated that “V14 Lite” is on track for a June 2026 release, bringing a distilled version of its latest FSD software to older vehicles.
The update is expected to include most of the major features found in current V14 builds, offering a meaningful improvement in capability even if full unsupervised driving remains out of reach on HW3.
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