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Tesla is changing the way it thinks about what matters most in its self-driving cars. According to Gene Munster, a well-known tech investor, Tesla is now focusing less on how far a car can go on a single charge and more on how smart its onboard computer is. In simple terms, the company wants its cars to “think” better, not just drive longer.
Right now, Tesla cars have three different levels of computer hardware, called HW3, HW4, and the upcoming HW5. Around 1.4 million Teslas in the U.S. are still using HW3, which is an older system. These cars run on software that doesn’t recognise objects very smoothly or make decisions as well as the newer versions. It’s kind of like using an outdated phone; it works, but it’s not as fast or smart.
The next level up is HW4, which started being added to new Teslas in 2023. This version is much more powerful, up to 8 times faster than HW3, according to Elon Musk. These newer systems are already powering Tesla’s growing fleet of robotaxis in Austin, which grew from 15 to 35 cars in just three weeks. That’s a sign Tesla is really moving forward with its plans for fully self-driving taxis.
Because so many people bought Tesla’s Full Self-Driving (FSD) feature expecting it to work better than HW3 allows, the company might offer refunds of $8,000 to $10,000 to those customers. That could cost Tesla between $40 and $80 million. While that’s a big number, it’s not a huge deal for Tesla since the company has around $37 billion in cash and investments.
Looking ahead, Tesla is preparing to launch HW5, the most advanced version yet. It’s expected to arrive early next year and will be 10 times more powerful than HW4. This new hardware is seen as the key to finally making true self-driving cars a reality, the kind that could compete with Uber and drive you around without a human at the wheel.
Elon Musk says he wants over a thousand robotaxis on the road in different cities by the end of this year, and experts like Munster think that’s actually possible. Still, even with HW5, the journey isn’t over. Tesla will need to keep improving its car computers because self-driving technology is incredibly complex, and the smarter the cars get, the more computer power they’ll need.
Tesla’s future depends more and more on how smart its cars are, and the company is betting big that better brains will beat longer batteries.