Tesla Owners May Need to Visit New Microfactories to Update Full Self-Driving

The upgrade path for Tesla owners who have purchased fully autonomous driving software but own older cars is proving complicated and complicated.

To take full advantage of the software package for which some Tesla owners paid up to $15,000, some VE owners will need newer hardware that cannot be easily added. This could mean a computer and camera swap or replacement in new microfactories across the country, according to Elon Musk.

Musk discussed options during Tesla’s Q1 2026 earnings call, explaining to investors that due to the hardware limitations of Tesla vehicles labeled HW3 (Hardware 3), those who purchased FSD will need a hardware upgrade. The company has started moving from HW3 to its next hardware release, AI4 (also known as HW4), in early 2023.

“Unfortunately, HW3 simply does not have the capability to achieve FSD without supervision,” Musk said on the call. “For customers who have purchased FSD, what we are offering is essentially a discounted trade-in for cars equipped with AI4 hardware.”

Alternatively, customers will be offered the option to replace the car’s computer, but that will also require replacing the car’s cameras to access the hardware. 4 This will require Tesla to build “microfactories” in U.S. cities to accommodate the millions of potential upgrades, he said.

Musk also said the change could benefit the company’s Robotaxi business; this would allow any car upgraded to HW4 to join the fleet.

As the website Inside EVs pointed out, Tesla previously described Tesla HW3 cars as capable of fully autonomous driving. The site notes that this was detailed in a blog post that has since been deleted.

A Tesla representative did not immediately respond to a request for additional comment.

Tesla attracted the attention of the California DMV for how it marketed fully autonomous driving, at one point. leading to a confrontation which threatened to take away the company’s ability to sell cars in California. Tesla agreed to change its marketing and how it describes fully autonomous driving features, which it used interchangeably with the term “Autopilot.”

Tesla also increased the price fully autonomous driving and moved it to a subscription service rather than a one-time purchase of software.