According to a recently published article by Bloomberg, the Trump administration intends to introduce a federal framework for autonomous vehicles. According to members of the administrative transition team, this new framework will be part of the Transportation Department’s list of priorities.
This places Tesla in a good position to begin working towards establishing and expanding its Robotaxi network and getting production, validation, and approval of the Cybercab off the ground.
Legal Limits
Today’s laws have fairly strict requirements for any vehicle that travels on the road—it needs to have steering wheels, pedals, mirrors, and plenty of driver-awareness or driver-assistance safety features. None of these are needed on a Robotaxi, and Tesla’s Cybercab also has none of these items. Instead, with no pedals and no steering wheel, it takes passengers from origin to destination with minimal user input.
The framework for autonomous vehicles could be spearheaded by former Uber executive Emil Michael, who could potentially take on the Transportation Department under the new administration. Uber previously worked on their autonomy program and is potentially a direct competitor to Tesla’s Robotaxi network.
The current regulation, in addition to having stringent hardware requirements, caps the number of autonomous vehicles a single company can operate at 2,500 units per year. This could drastically limit how Tesla’s Robotaxi network functions, especially since it doesn’t need additional high-resolution mapping to work in a specific location. FSD is extremely adaptable and learns on the fly.
Rather than deploying just a couple thousand units a year, Tesla needs to be able to deploy tens of thousands - the more units on the road, the faster they can collect data and iterate, especially with the recent deployment of their new Cortex Supercomputer.
State Laws
There’s one more obstacle to the mass deployment of autonomous vehicles—state regulations. Every state has its own set of regulations, and even with federal guidance and regulations becoming less limiting and more open, every state can choose to establish exactly how much autonomy it wants.
Tesla and other companies like Waymo, which are pursuing autonomous transportation, will have to navigate a regulatory maze to get their vehicles approved at a state-by-state level.
Tesla has already taken steps to get its Robotaxi network off the ground in Palo Alto, an affluent city that has been struggling to provide affordable transportation for its residents. With looser federal regulations, Elon’s timeline of deployments in Texas and California by late 2025 may move even sooner.
This is definitely a framework to watch — with Tesla’s stock up 8% this morning on the news, unsupervised FSD and Robotaxi could be coming quicker than anyone expects.
Tesla has been struggling to provide FSD updates for vehicles with Hardware 3 (HW3). What was once thought to be enough compute power to solve autonomy, is no longer able to handle the latest FSD updates.
Yesterday, Tesla finally confirmed that vehicles with HW3 will need to be upgraded to achieve Unsupervised FSD.
HW3 Upgrade Finally Confirmed
Musk had previously suggested that an upgrade might be necessary and Tesla would upgrade these vehicles if needed. However, during yesterday’s earnings call, Musk admitted that HW3 vehicles will, in fact, need to be upgraded. Tesla said that these upgrades will be performed free of charge for owners who have purchased the FSD package, leaving subscribers wondering what will happen to their cars.
Musk stated, “That's going to be painful and difficult, but we'll get it done. Now I'm kinda glad that not that many people bought the FSD package haha.” This appears to confirm that Tesla doesn’t plan on upgrading HW3 on vehicles that subscribe to FSD.
What About Subscription-Based FSD Owners?
While there are a lot of questions, one of the bigger ones is what happens to owners who have subscribed to FSD. Tesla didn’t touch on the topic, but if they’re not planning to upgrade HW3 subscribers, then they could potentially offer a paid retrofit. When the Model 3 was first released, it came standard with HW 2.5. At the time, Tesla said that you won’t need anything better unless you plan to buy FSD. Tesla ended up upgrading owners who had bought FSD for free, but non-FSD owners were required to pay for an upgrade.
Based on previous hardware upgrades—such as the HW2.5 to HW3 transition—a paid upgrade could cost between $1,000 to $3,000. However, it’s not clear what the upgrade to HW3 vehicles will be or how much it will cost even if a paid upgrade becomes available.
FSD on HW3
Musk also hinted that FSD was not selling as well as Tesla had hoped, which likely influenced the introduction of subscription-based FSD.
Meanwhile, Tesla continues to improve HW3-based FSD. FSD V12.6 offers major improvements in smoothness and is considered a “baby V13” with notable improvements over V12.5.4.2. Reverse capabilities are also expected to arrive in a future release for HW3 vehicles, so Tesla hasn’t stopped development just yet. However, Musk was clear that HW3 will continue to lag behind HW4 releases moving forward.
FSD V14 and the Future of HW3
Tesla has stated that FSD V14 will be another significant step toward achieving Unsupervised FSD. The increasing complexity of FSD models and their growing context sizes mean that HW3 is already not able to run the larger FSD V13 models, but according to Tesla, V14 will increase the AI model even further, making it nearly impossible to run on HW3. As AI models become increasingly larger and AI5’s impending arrival approaches, one wonders how long before HW4 can’t run the latest models.
However, Tesla appears confident that HW4 will be sufficient, given its plans to launch FSD-powered robotaxis later this year.
What Will the HW3 Upgrade Look Like?
While Tesla has confirmed the HW3 upgrade, specific details remain unknown. We know that it won’t just be an upgrade to hardware 4 since that computer consumes more power than HW3’s electrical harness can provide, and it also has a different form factor, making retrofitting difficult.
Instead, Tesla will likely have to develop a new FSD hardware unit tailored for the retrofit or modify existing components to fit HW3-equipped vehicles. The hardware will need to be at least as computationally capable as HW4, but use the power of a HW3 unit.
Tesla has also said that it has no plans to replace cameras during the upgrade, despite HW3 cameras having significantly lower resolutions than HW4’s. While Tesla appears confident that this won’t be an issue, owners have reasons to be concerned as Tesla recently increased video processing resolution on HW4 cameras to improve FSD performance.
Tesla’s confirmation of an HW3 upgrade certainly makes more owners comfortable. However, the lack of details leaves subscribers and others wondering what will happen to their vehicles. It also doesn’t do much to ease the frustration of dealing with slower and less capable FSD releases, especially when they pay the same amount as HW4 owners, who receive more features and a smoother ride.
While free upgrades will be available for those who bought FSD outright, subscription-based owners are left in limbo, with no details on potential paid upgrade options.
With FSD V14 on the horizon and HW3 vehicles already struggling with the latest models, this upgrade will be crucial to keep existing owners happy.
Tesla continues to find efficiencies that lower vehicle production costs. In fact, at their earnings call, Tesla announced that their cost of goods (COGs) are now the lowest they’ve ever been. The other day, Tesla completed the Cybertunnel, an underground tunnel that goes underneath a highway, making it easier to get Cybertrucks to their loading lot, and now they’re incorporating FSD into the process.
Tesla announced that newly built vehicles at its Fremont factory now autonomously drive themselves from the end of the production line to the logistics lot, where they are prepared for delivery. This again increases efficiency and lowers vehicle costs.
Unsupervised FSD
Tesla isn’t just using FSD for this. For the first time outside of testing and the Robotaxi event, Tesla is using Unsupervised FSD.
While Unsupervised FSD is not yet ready for widespread public use, Tesla has implemented it in a controlled setting on private property. Without human intervention, the vehicles navigate a 1.2-mile route from the Fremont factory to their designated loading dock lanes. This allows Tesla to refine the software in a real-world environment while avoiding regulatory hurdles that apply to public roads.
One hurdle Tesla needed to overcome was camera calibration. Vehicles typically need to be driven for 20-25 miles on clearly marked roads for the cameras to be calibrated. Only once this process is complete, does FSD become available to the driver.
This meant that new owners weren’t able to experience FSD right after delivery and instead usually needed to wait a day or two before calibration was completed. However, Tesla now calibrates the cameras at the factory with presumably new methods so that the vehicle doesn’t need to be driven a bunch of miles before FSD is ready.
Calibration is now done automatically as the vehicle moves through the manufacturing line.
With Tesla’s Fremont factory successfully deploying Unsupervised FSD, attention now turns to Giga Texas and other factories globally. Fresh lane markings have recently been noticed at the logistics lot in Texas, suggesting that Tesla may soon introduce a similar process there.
Tesla recently completed the Cybertunnel, an underground tunnel connecting Giga Texas to the Cybertruck’s loading area. This tunnel shortens transportation time for Cybertrucks moving from the production floor to the logistics lot. When Tesla shared the Cybertunnel video, you could clearly see employees driving the Cybertrucks through the tunnel, but it’s likely just a matter of time before Cybertrucks navigate the Cybertunnel autonomously.
This new move by Tesla helps them continue testing and refining Unsupervised FSD while also reducing costs by eliminating manual driving from production to shipping lots. It also improves the new customer experience by having cameras calibrated and FSD ready to go at delivery. Tesla said years ago that one day, you’ll be able to order a Tesla, and it’ll drive itself to you. This process would further eliminate costs and speed up delivery times. While this may still be years away, it seems like we’re now one step closer.
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