Elon Musk was asked directly on Tesla’s Q2 2026 earnings call whether the company still plans to upgrade Hardware 3 (HW3) cars so they can run its latest “Full Self-Driving” software. His answer made one thing clear: Tesla still has no concrete plan.

Instead of committing to a fix, Musk floated a grab-bag of options and timelines — none of them firm — for the millions of vehicles Tesla sold with the promise that they had “all the hardware necessary” for self-driving.

Truist analyst Will Stein asked whether it’s “still the plan to do hardware upgrades on the cars” so HW3 vehicles can process FSD v15 and future versions.

Musk’s response was noncommittal. He said it would “make sense” to upgrade “all cars that have less than Hardware 4,” and that it would be “financially sensible at some point to upgrade them” — but he never committed to when, how, or at what cost to Tesla.

Then he muddied it further. Rather than upgrading HW3 cars to Hardware 4, Musk said Tesla would “want to upgrade them to the next generation” of AI board — either a “moderate improvement over AI4” reaching production “around the middle of next year,” or the more powerful AI5, which he said would “hopefully” be in volume production later next year. And AI5, he added, “will initially go into Optimus.”

In other words: the chip Tesla might eventually use to fix HW3 cars isn’t in production yet, and when it does arrive, Tesla’s humanoid robot is first in line for it.

Tesla told buyers as far back as 2016 that “all Tesla cars being produced now have full self-driving hardware.” It sold FSD — priced as high as $15,000 — on that basis for years.

Musk has since admitted HW3 “simply does not have the capability to achieve unsupervised FSD,” noting it has “1/8th of the memory bandwidth of Hardware 4.” Tesla quietly changed its “all cars have self-driving hardware” wording in its Q3 2025 shareholder letter as class-action lawsuits piled up in the US, China, and Australia.

Electrek has reported that Tesla may ultimately have to replace the computer in roughly 4 million cars or compensate their owners. The company has already started shipping a stripped-down FSD v14 “Lite” to HW3 vehicles — a stopgap that highlights the hardware gap rather than closing it.

The reason Tesla keeps moving the goalposts is that actually retrofitting millions of cars is a logistical and financial nightmare.

Earlier this year, Musk floated the idea that Tesla would build “micro-factories” just to retrofit HW3 cars, conceding that its service centers would be far too slow to handle the volume. On this call, he offered no update on that plan — or any other.

The micro-factory plan sounds even less plausible than retrofits through service centers.

Listen to Musk’s answer again and the takeaway is unmistakable: there is no plan. He was asked a direct question about millions of paying customers, and he responded with a stream of options — upgrade to Hardware 4, or maybe an improved AI4, or maybe AI5 — none of them concrete, none of them scheduled, all of them pointed somewhere down the road.

The reality is that Tesla doesn’t want to deal with the HW3 situation, and it has no intention of dealing with it for the foreseeable future. Every path is bad for Tesla. Retrofitting millions of cars through its service centers would crush a network that’s already stretched thin. Building dedicated “micro-factories” just to swap computers, as Musk has floated before, is even more absurd — a massive capital project to fix a problem Tesla created by selling software it couldn’t deliver on hardware it oversold.

So instead, Musk keeps pushing the solution further out. Now HW3 owners are told to wait for a next-generation chip that isn’t in volume production yet — and that Optimus gets first. That’s not a fix. It’s a stall.

The core fact hasn’t changed: millions of people bought Tesla vehicles because the company told them they had, in Tesla’s own words, “all the hardware necessary” for unsupervised self-driving. It’s now confirmed that they don’t. A normal company would make those customers whole. Tesla, years into this problem, still won’t even commit to how — only that owners should keep waiting for another upgrade that may or may not support unsupervised self-driving.

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