Tesla will build factories just to retrofit HW3 cars it said could do FSD, but can't
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By Jameson Dow
Published on April 22, 2026.
Tesla CEO Elon Musk has proposed that the company could build "microfactories" in urban areas to retrofit cars that were sold for promise of full autonomy without the hardware capable of doing so. This could add high costs for a company already struggling with profitability. The company sold millions of vehicles with computer systems called "hardware 2" and "Hardware 3" (HW2 and HW3), and sold software called "Full Self-Driving" for up to $15,000. However, it has become clear that HW3 also lacks power necessary for full self-driving. Tesla has been working on improving its hardware to run more difficult software tasks. Despite this issue, the company has tried to entice owners to upgrade their vehicles through trade-in schemes and moved FSD to a subscription-only option.
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