Tesla Appears To Be Backing Out Of Its Promise To Equip All HW3 Cars With Robotaxi-Grade FSD, But The Refund Liability Might Not Be As Ginormous As Initially Feared
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Tesla is now contending with the fallout from its extremely rosy but as yet unfulfilled promises that were made back in 2016, when the EV giant offered unqualified commitments to eventually equip all of its vehicles sold since then with robotaxi-grade FSD capabilities. Now, given the engineering challenges involved in forcing older hardware to work seamlessly with Tesla's ever-evolving FSD software, the EV giant has apparently rescinded on its commitments, opening the door to billions of dollars worth of refund liabilities.
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Tesla has now deleted its 2016 blog post that offered unqualified commitments to equip the entirety of its fleet with cutting-edge FSD capabilities. You may still access that blog via the wayback machine (click here).
This development has predictably spawned doomsday predictions of Tesla having to face refund liabilities as large as $380 billion! However, when you dig deeper, the resulting liabilities from this policy change might not be as ginormous.
Our readers should note that only a small proportion of the Hardware 3 (HW3) fleet subscribed to Tesla's FSD package. In fact, the EV giant currently has only ~$3 billion in HW3-related unrealized revenue on its books. So, the direct liabilities from this action might not matter in the greater scheme of things.
The bigger threat to Tesla arises from the loss of revenue claims, where some HW3 car owners sue Tesla to recoup the revenue that they might have generated from the robotaxi-grade FSD capabilities of their cars.
Alternatively, the courts might compel Tesla to upgrade all HW3 cars to HW4 ones. There is after all a legal precedent for this action. Back in 2022, a court compelled Tesla to upgrade the
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