• Bought a Tesla before 2023? Bad news: your car won't be able to drive itself.
• Elon Musk said last week that vehicles with previous-gen tech can't support full autonomy.
• Longtime Tesla owners told Business Insider they felt let down by the company's announcement.

For years, Tesla sold its EVs with the promise of an autonomous future. Now, some owners face being left behind.

On Tesla's earnings call last Wednesday, Elon Musk said that Tesla vehicles shipped before 2023 — which are equipped with a previous-gen Hardware 3 computer — would not be able to achieve fully unsupervised Full Self-Driving (FSD).

"I wish it were otherwise, but Hardware 3 simply does not have the capability to achieve unsupervised FSD," said Musk.

The billionaire said that Tesla would offer Hardware 3 owners the choice of a "discounted trade-in" or a physical replacement of their car's computer and cameras at "micro factories" in major cities.

The announcement is a major blow for longtime Tesla owners, who paid thousands of dollars and have been waiting for years under the impression that their vehicles have the tech necessary to achieve fully autonomous driving.

As far back as 2016, Tesla stated in marketing materials that all its vehicles had the necessary hardware for "full self-driving capability at a safety level substantially greater than that of a human driver."

In a 2019 tweet, Musk said that all Tesla vehicles produced since 2016 had the right hardware for FSD or were "trivially upgradeable."

"It feels like a bait and switch at this point," Andrew Apperley, who bought a used 2018 Model 3 with FSD for $53,000 in 2023, told Business Insider.

"They kind of shot themselves in the foot by saying that this is going to come, and then it never does," Apperley said, adding that he felt like Hardware 3 customers would find it hard to trust Tesla and Musk's promises in the future after waiting in vain for unsupervised FSD.

Tesla did not respond to a request for comment from Business Insider.

Autonomy angst

Rick Flashman, who paid $10,000 for FSD when he bought his Model 3 in 2022, told Business Insider that, despite receiving increasingly generous trade-in offers from Tesla, he was not interested in swapping out his EV for a vehicle with up-to-date hardware.

"My car's in great shape. It's got 73,000 miles, it's driving perfectly, so I have no reason to upgrade it," Flashman said.

The Florida resident said that FSD was one of the main reasons he bought a Tesla, adding that he uses it for "over 90%" of his driving.

Hardware 3 vehicles in the US run a more limited version of FSD, with Tesla planning to release a "lite" variant of FSD version 14 for older vehicles in June.

Despite his car's limited capabilities, Flashman said he was well satisfied with the tech and is happy to wait for the overhaul Musk promised on Wednesday.

"It might take another year, but I'm one of the ones who's just waiting it out," he said.

"I wish it were sooner, obviously. But I don't feel like I was ripped off," Flashman added.

Matt Simmons, a Tesla owner who bought his Model 3 Performance in 2019, told Business Insider he added FSD for an extra $6,000 because he was curious about the hype. Seven years later, he says he rarely uses the feature.

"It kind of sucks, if I'm being honest," said Simmons, who said he doesn't use FSD on highway trips because of issues with the software's speed control.

Simmons said that he was not surprised by Musk's comments, pointing to the Tesla CEO's track record of making ambitious predictions for self-driving cars have often failed to fully pan out.

"We realize we're being strung along at this point," Simmons said.

The Pittsburgh resident described his Tesla as "long paid for" and said he had no intention of trading it in for a more advanced model.

"That would mean I'd have to buy another Tesla," said Simmons, who said he was hoping that rival EV maker Rivian would offer a similar deal for disenfranchised FSD owners.

Backlash goes global

Some Hardware 3 owners are done waiting for the software they paid thousands of dollars for years ago.

Tesla is already facing several lawsuits in the US from owners who say they were misled by the company's FSD marketing, and the backlash is starting to go global.

Earlier this month, Tesla finally received the green light to launch FSD in the Netherlands, marking the tech's debut in Europe after a yearlong campaign to woo regulators.

However, the rollout in the Netherlands excluded Hardware 3 owners, prompting Mischa Sigtermans, an executive at Amsterdam-based Ryde Ventures, to start a website to gather European Tesla owners for potential legal action.

Nearly 4,000 verified Tesla owners have now signed up to Sigtermans' website.

The Model 3 owner, who paid 6,400 euros ($7,530) for FSD in 2019, told Business Insider that Musk's comments confirmed many owners' worst fears, and said that the proposed solution of a discounted trade-in would simply make owners "pay for the same broken promise twice."

"Musk said out loud what many of us have been saying for months, if not years," said Sigtermans. "The admission is there, the solution isn't."

• Elon Musk said that Tesla and SpaceX would collaborate on a moonshot Terafab chip-building project.
• Tesla has posted its first Terafab roles in California and Texas, and is offering a wide salary range.
• SpaceX is also ramping up hiring at its silicon division as it looks to bring chip production in-house.

Tesla and SpaceX are ramping up semiconductor hiring as Elon Musk's ambitious plans for a Terafab take shape.

Tesla is hiring Terafab engineers in Palo Alto and Austin, according to job listings on the company's website, after Musk said the company would collaborate with SpaceX to build what could be the largest chip manufacturing plant in history.

In California, the EV giant is looking for module process engineers with expertise in lithography, the highly technical discipline that uses ultraviolet light to etch chip designs onto silicon wafers at a molecular scale. It is offering a base salary of $88,000 to $240,000, depending on experience and other factors.

Applicants need to have at least 10 years of experience in cutting-edge semiconductor development.

The job listing suggests they would also need to be comfortable with Tesla's famously intense work culture, with expectations including a willingness to be on-call to "support 24/7 manufacturing operations" and respond rapidly to "critical production issues."

At the Terafab announcement on Saturday, Musk said the facility would create lithography masks — the quartz or glass template that contains the chip design imprinted onto the wafer — in-house, allowing Tesla and SpaceX to quickly iterate and improve chip designs.

"To the best of my knowledge, this doesn't exist anywhere in the world," said Musk, who added that the companies were exploring "some very interesting new physics" to make the project work.

Tesla's Terafab division is also hiring process integration engineers to build advanced logic chips, with base salaries ranging from $88,000 to $338,280. Musk has said Terafab will combine logic and memory chip production under a single roof, something that is highly unusual in the chipmaking industry.

The wide salary range is in line with Tesla's approach to compensation. Business Insider previously reported that the company offers lower base salaries than its tech giant rivals, but includes substantial stock grants.

Tesla is also advertising open roles for silicon engineers in Austin, and is looking to recruit a technical program manager with a proven track record of running "$100 million-plus capex projects" to oversee the design and construction of the fabs. Neither job listing includes base salaries.

Tesla faces talent scramble over Terafab

Recruitment will be one of the biggest challenges facing Musk's ambitious goal of building one of the world's largest semiconductor manufacturers from scratch. The industry relies on specialized knowledge that is carefully cultivated within leading companies like TSMC. It's also facing a global shortage of skilled workers.

SpaceX is scaling up its semiconductor hiring as the rocket maker prepares to launch up to one million orbital data centers, powered by AI chips built by Terafab that are specially adapted for the icy wastes of space.

The company has around 60 open positions in its Silicon division, according to SpaceX's website, though it's unclear which of these roles — if any — are directly related to Terafab.

They include assembly and packaging engineers at its Starlink factory in Bastrop, Texas, where the company invested $280 million last year to expand its semiconductor R&D and packaging facilities, as well as engineers in Washington and California to develop "cutting-edge" specialist chips for deployment in space and on Earth.

"In true SpaceX fashion, Starlink is taking the next step in vertical integration by bringing integrated circuit packaging and assembly in-house for development and manufacturing," read the descriptions on the Bastrop job listings, which do not include salaries.

SpaceX and Tesla did not respond to a request for comment.

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• Elon Musk is about to unveil his most challenging project yet: a giant semiconductor factory.
• The billionaire has said Tesla needs to build a "Terafab" to churn out chips for its robotaxis and Optimus robot.
• One analyst said to never rule Musk out, but that building a Terafab could be harder than sending rockets to Mars.

Self-driving cars, cyborgs, and catching rockets in midair: Elon Musk can't resist the lure of the impossible.

The world's richest man has made a habit of taking on the world's most difficult engineering challenges at Tesla and SpaceX — and has often proved the doubters wrong. His latest target is a tall order even by his standards.

For several months, Musk has been talking about building a "Terafab," a mammoth factory that would churn out semiconductors critical for Tesla's ambitious rollout of robotaxis and humanoid robots.

On Saturday, he teased that an announcement was imminent. "Terafab Project launches in 7 days," Musk wrote in an X post, without providing further details.

In a January earnings call, the billionaire cited chip production as the major long-term headwind to the company's growth, suggesting that output from suppliers Samsung, TSMC, and Micron would be nowhere near enough to meet Tesla's targets as the EV giant scales its robotaxi and humanoid robot programs.

"This is definitely going to be sort of a controversial thing, but I think Tesla needs to build a Terafab," Musk told investors, adding that such a facility would also protect Tesla against geopolitical upheaval.

The Tesla CEO suggested that the company would pursue the hardest possible version of that vision, a "very big fab" that would produce and package logic and memory chips entirely in the US.

Speaking at Tesla's annual shareholder meeting last November, Musk estimated the Terafab would aim to initially produce 100,000 silicon wafers a month and could eventually grow to 1 million.

Ahead of the Terafab announcement, Tesla has begun laying the groundwork for Musk's grand plan. The tech giant is hiring a semiconductor infrastructure manager to oversee factory design and construction, per a recent job posting. The role is based in Austin, suggesting the Terafab could be built near Tesla's gigafactory on the outskirts of the city.

However, analysts told Business Insider that Tesla would face enormous challenges — and a huge bill — as it tries to master one of the most complex technologies on the planet.

"It's Musk, so I would never count it out. But I suspect this is actually harder than sending rockets to Mars," Stacy Rasgon, managing director and senior semiconductor analyst at Bernstein, told Business Insider.

Semi-impossible?

The global supply of semiconductors is almost entirely produced by a small handful of companies, many of them based in East Asia.

Manufacturing them is an expensive, complicated, and time-consuming process. Deep within hermetically sealed factories, chip designs are etched onto thin silicon wafers at the molecular level by specialist lithography machines, which are almost entirely made by one company in the Netherlands and can have a waitlist of over a year.

Rasgon said that procuring these in-demand ASML-built machines was a critical roadblock for any would-be chipmaker.

"If you're a brand new customer, you're probably waiting a couple of years before getting your hand on one of those," he said.

Rasgon added that chipmakers usually split up production of logic and memory chips and semiconductor packaging across different factories.

Musk's suggestion that Tesla could integrate them all into one facility would make scaling the Terafab even more complicated, Rasgon said, as each product has wildly different processes and economics.

Musk is not alone in fearing geopolitical disruption. The threat of a Chinese invasion of Taiwan, which would plunge global chip supply into chaos, has prompted companies, including TSMC, to build new chip fabs in the US.

But the road to US-produced semiconductors has been far from smooth. TSMC's Arizona expansion has faced years of delays and a total price tag of around $165 billion across multiple facilities.

The industry runs on technical knowledge that is deeply embedded within leading companies. TSMC flew employees out from Taiwan to help the Arizona facility ramp production and brought US workers to its home country to train them.

The need for specialized knowledge will make recruitment critical for Tesla's Terafab hopes, Rasgon said, adding that the semiconductor industry is already facing a worker shortage.

"These guys don't grow on trees," he said.

A 'Herculean' challenge

Analysts warned that overcoming these challenges would add to the severe cash burn Tesla is set to face in the coming years.

The company said in January it would spend $20 billion on building out its robotaxi and Optimus production lines this year, a figure which does not include the Terafab project.

Ben Kallo, a senior research analyst at Baird, told Business Insider that investors would have questions about how Tesla plans to fund such an ambitious project — especially considering Musk has also said Tesla will build around 100 gigawatts of solar panel manufacturing.

"Where's the money coming from? I think that's going to be a question," said Kallo, who added that he wouldn't rule out Tesla raising outside capital for the first time since 2020 to fulfill Musk's ambitious targets.

Musk hasn't given a specific timeline for building the Terafab and producing chips, but he said in the January earnings call that he was building it to "remove a probable constraint in three or four years."

In a Tuesday note, Morgan Stanley analysts led by Andrew Percoco pointed to Micron's factory in Boise — which began construction in late 2022 but isn't expected to begin shipping chips until mid-2027 — as evidence of how long it can take to build semiconductor infrastructure in the US.

They estimated that building a factory capable of producing 100,000 wafers for cutting-edge logic chips a month could cost as much as $45 billion. A note from UBS analysts in January estimated that just getting to Musk's initial production target of 100,000 silicon wafers a month would cost $30 billion.

"Even understanding Elon Musk's history of doing difficult things, this seems like a Herculean task," the Morgan Stanley analysts wrote.