Tesla faces a potential billion-dollar lawsuit because the promised autonomous driving technologies do not work as expected in many already delivered vehicles. In particular, the HW3 hardware systems installed in around 4 million Tesla electric cars are not powerful enough to enable Full Self-Driving (FSD) as announced. But what does this mean for the affected Tesla owners?
What is the problem with HW3?
Tesla CEO Elon Musk is known for his optimistic promises, especially when it comes to the development of autonomous vehicles. In 2016, Tesla promised that all future-produced vehicles would have the necessary hardware for the FSD system. The goal was to make the cars fully autonomous robotaxis that could drive independently after a software update. But the reality is different: The installed HW3 computers are not powerful enough to implement the promised features.
Hardware systems at Tesla: A review
Since 2017, Tesla has been installing the HW2.5 hardware system in its vehicles, which is based on cameras, radar, and ultrasonic sensors. But it soon became clear that this system was not sufficient. Tesla therefore opted for the HW3 hardware system, which was installed in vehicles in 2019. In 2023, Tesla began introducing the more powerful HW4 system, but maintained that HW3 was sufficient for autonomous driving. It was not until 2025 that Musk publicly admitted that the HW3 computers could not deliver the desired results.
What does this mean for Tesla owners?
Worldwide, around 4 million vehicles are equipped with the HW3 system, including many models produced between 2019 and 2022. Owners who purchased the FSD package are likely disappointed now that Tesla cannot deliver the promised functions. Musk has already hinted that Tesla might retrofit the HW3 computers of the affected vehicles or offer compensation. However, this measure will be associated with high costs.
Retrofitting and compensation: What can Tesla customers expect?
Estimates suggest there are around 500,000 vehicles worldwide equipped with HW3 and owned by FSD buyers. But even for the approximately 4 million vehicles sold since 2016 that contain HW3 technology, Tesla could be held liable. A possible precedent from 2022 shows that Tesla was required to retrofit hardware for free so that customers could use the FSD package at no additional cost. The question now is whether Tesla will carry out the retrofits or instead pay billions in compensation. must.
What costs could Tesla incur?
The potential compensations could become expensive for Tesla. Electrek estimates that the liability could run into billions if Tesla is required to pay compensation to all affected customers. But the trust in Tesla's technology could also suffer, as the repeated failure to meet promises could affect customers' confidence in future products, particularly the new HW4 system.
Conclusion: The future of Tesla's autonomous technology
Tesla is currently facing a difficult decision: retrofit or pay compensation. In any case, this situation will bring high costs and possibly a loss of image for the company. Tesla must now prove how it deals with the consequences of its early, optimistic promises and whether it is able to restore customer trust in its autonomous technology.
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