Tesla CEO Elon Musk has admitted that Tesla’s older fleet of electric cars equipped with Hardware 3 computers and camera systems will need to be upgraded to fully utilise its FSD (full self-driving) software in the future.
At the company’s Q4 earnings call today, Musk said: “We are going to have to upgrade Hardware 3 for people who bought FSD. That’s the honest answer. It’s going to be painful and difficult, but that’s what we’re going to have to do”.
Indeed, Musk admitted he was “relieved” that the company did not sell more full FSD packages, but many did and will need to upgrade – it will be done free of charge – if they want to use FSD when it becomes available in the future.
The company also noted that they had not “given up” on FSD software releases on Hardware 3 and are generally trailing Hardware 4 vehicles regarding FSD software updates.
Musk noted that the company is very excited about the future of this program and will be launching unsupervised self-driving “full-service” with no one in the car in Austin, Texas by June, followed by California and other parts of the US by the end of 2025.
Musk is also betting that the regulatory picture will be better – at least in the US – thanks to his influence over and within the Trump administration, although he lamented the hurdles the company had to jump through in Europe and other countries.
Tesla appears to be pretty satisfied with the progress of the FSD program in late 2024 and into 2025 since the company also shared that Tesla’s vehicles can now drive themselves from the end of production at their Fremont factory to their designated transit parking spots at the factory.
This is a major achievement, and the company shared a video of it on Tesla AI’s X page a day prior to the earnings call.
Teslas now drive themselves from their birthplace at the factory to their designated loading dock lanes without human intervention
One step closer to large-scale unsupervised FSD pic.twitter.com/Aj6dHsLaRO
— Tesla AI (@Tesla_AI) January 29, 2025
Musk also hinted that major automotive companies were already in talks with Tesla to license their FSD software but noted that Tesla would only entertain licensing deals where the licenced volume is very high.
Other positive news shared included the Tesla Model Y officially being declared the best-selling car in the world in 2024 and sales soaring in markets like China ahead of the new Model’s release earlier this month.
All Tesla factories are expected to be producing the new Model Y by February, making it one of the smallest manufacturing transition periods for a refreshed Tesla product.
Sticking to new products, Tesla also confirmed that the long promised “affordable” model is still on track and would be coming by mid-2025, with more models to come from there.
The average cost of Tesla EVs has also fallen below $US35,000, which is an improvement over the previous quarter when it was just above that mark.
Interestingly, Musk was also quizzed on the future of the EV market given Trump’s promised cancellation of EV rebates and other incentives. That decision is likely to favour Tesla, because it was the legacy car makers that now need the government incentives most, but Musk insisted that electrification, and autonomy, was inevitable.
A major focus of the call was looking into where Tesla is heading and its progress on FSD, Robotaxi services and the development of the humanoid robot Optimus.
Musk used the products to predict, once again, that the coming year might be the most pivotal, but this time – given his influence in the new administration – he might be right. He even predicted an “epic 2026 and a ridiculously good 2027 and 2028″.
The Optimus robot, Musk insisted, will have the capability to play the piano or thread the needle, and will begin with working around Tesla’s factories.
Production of version 2 of the robot is expected to go into production by mid-2026, which is designed for 10,000 units/month production before version 3, which will be designed for a production of 100,000 units per month.
Riz is the founder of carloop based in Melbourne, specialising in Australian EV data, insight reports and trends. He is a mechanical engineer who spent the first 7 years of his career building transport infrastructure before starting carloop. He has a passion for cars, particularly EVs and wants to help reduce transport emissions in Australia. He currently drives a red Tesla Model 3.