Elon Musk admits that millions of Tesla owners need upgrades for true “full self-driving.”

Elon Musk said on Wednesday that millions of Tesla owners will need hardware upgrades to run a future version of full self-driving software that doesn’t require human supervision — after he and Tesla spent years promising that wouldn’t be the case.

This admission could open the company to legal challenges from customers who bought Teslas based on the belief that the cars were just one software update away from being able to drive themselves.

Cars with the third version of Tesla’s driver-assistance technology, known as “Hardware 3,” will need a new computer and new cameras, Musk said on Tesla’s quarterly earnings call on Wednesday. He also said that these alternatives would be so burdensome that Tesla is looking to build “microfactories” in “major urban areas” so that the company’s service centers are not overwhelmed.

“If it was just done in a service center, it would be very slow and inefficient to do it,” Musk said on the call. “So basically, like many production lines, we need to make the change.”

Tesla owners with Hardware cars spent 3 years eavesdropping on the company and Musk to get a straight answer on whether they could operate this advanced version of full self-driving — which, it should be noted, Tesla has not yet launched, or proven capable of. Tesla sold these cars between 2019 and 2023.

Musk finally came to grips with the fact that the 3 hardware was not enough to power more advanced versions of full self-driving in January 2025.

“I think the honest answer is that we’re going to have to upgrade the computers of the people who bought the full self-driving system,” he said. “It will be painful and difficult, but we will get it done.”

However, the company’s CFO, Vaibhav Taneja, made a different claim just six months ago in October 2025 when he said Tesla might still be able to make it work. “We have not completely abandoned HW3,” he said at the time.

Tesla said Wednesday that it will continue to release slightly more advanced versions of its existing full self-driving software to owners of the 3 devices. But Musk was unequivocally clear that upgrades will be necessary for everything else.

“The 3 devices simply do not have the ability to achieve unsupervised FSD,” he said.