Tesla will build factories just to retrofit millions of HW3 cars it said could do FSD

Key Points:

• Tesla has sold millions of vehicles with hardware (HW2 and HW3) promised to support full self-driving (FSD), but neither hardware version is capable of true unsupervised autonomy, forcing the company to consider costly upgrades.
• CEO Elon Musk proposed building “microfactories” in urban areas to efficiently retrofit existing Tesla vehicles with upgraded HW4 computers and cameras necessary for full self-driving functionality, a move that could significantly increase expenses.
• Tesla has previously offered free or discounted hardware upgrades to FSD purchasers, but many owners remain dissatisfied, some pursuing legal action over the undelivered FSD capabilities promised at purchase.
• The company’s profitability is under pressure, with Tesla admitting it will not be cash flow positive for the rest of the year amid rising capital expenditures, raising investor concerns about the financial viability of large-scale retrofit operations.
• There remains uncertainty whether HW4 will ultimately enable full self-driving, as Tesla continues to develop future hardware, highlighting ongoing challenges in fulfilling long-standing autonomy promises made since 2016.