For years, Tesla has been selling people on the idea of full self-driving cars. Now, Elon Musk admits that most Tesla owners won’t see this without a meaningful hardware upgrade.

In the company’s most recent earnings call, Musk expressed his satisfaction with the lack of sales growth for FSD (unsupervised full self-driving). He also explained that in order for everyone to benefit from the service, should it become available, Tesla would need to install additional hardware upgrades before it would work.

BERKELEY - JUN 30: 2021 Tesla Model Y, equipped with FSD system. Three front facing cameras under windshield near rear view mirror. (Mark Leong for The Washington Post via Getty Images)
Mark Leong/The Washington Post/Getty Images

What is Full Self-Driving?

Tesla offers two versions of self-driving: autopilot and full self-driving. To complicate matters further, “Autopilot” is often referred to as “full self-driving (supervised),” and people often call autopilot “FSD.”

Full self-driving—the real FSD—is the carrot Tesla continues to dangle to existing owners and new car buyers. FSD means the vehicle is in charge of all functionality, and the driver can do anything, even sleep.

Drivers are so confused by all the self-driving misdirection that they've been caught sleeping using Autopilot. In 2021, a Tesla driver was sleeping behind the wheel as Autopilot sped down the highway. There have also been crashes associated with Autopilot.

Why Tesla owners aren’t getting Full Self-Driving

Though Musk said little during Tesla’s most recent earnings call, he did express that most Teslas on the road aren’t adequately equipped. Hardware 3, the computer Tesla used in vehicles from 2019 to 2023, cannot handle FSD, even though the automaker has been selling it in its vehicles and offering FSD as an upgrade for years. -

"The honest answer is that we're going to have to upgrade people's Hardware 3 computer for those that have bought full self-driving,” Musk said. “And that is the honest answer, and that's going to be painful and difficult, but we'll get it done. Now I'm kind of glad that not that many people bought the FSD package.”

Tesla stated that neary all of the cars it sold in 2024 were Models 3 and Y. Above, a Tesla retail location in Smithtown, New York.
Newsday LLC/Getty Images

The LIDAR problem

Another issue Musk faces is whether Tesla needs LIDAR (light detection and ranging) for FSD.

Other vehicles, like Alphabet’s Waymo cars, use LIDAR to operate autonomously. LIDAR bounces lasers off surrounding items to help a vehicle’s onboard computer avoid other cars, people, obstacles, and buildings.

Musk doesn’t believe LIDAR is necessary, saying, "Obviously, humans drive without shooting lasers out of their eyes," adding, "Humans drive with eyes, and a neural net and a brain neural net, sort of biological, which is the digital equivalent of eyes and a brain are cameras and digital neural nets or AI. So, the entire road system was designed for passive optical neural nets.”

Final thoughts

Musk’s idea that Teslas only need cameras and an onboard computer seems misguided and unsafe. He's distilling driving to ocular sensors and decision-making based on experience, not reason. He cares more about AI than making great cars.

Alphabet's Skunkworks division created Waymo using LIDAR technology. If an entire team of dreamers decided on LIDAR for what Musk is trying to achieve, it seems like the most reliable path forward.

We may soon see if Musk is right. Tesla is allegedly rolling out an autonomous robotaxi service in Austin, Texas, this June, which Musk claims will use FSD. We’ll have to see it to believe it, though, as we’ve been told FSD is “months away” for years.

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