Tesla has held an profits name to speak about its first quarter 2026 effects, and printed extra about its plans, together with a metamorphosis of middle on guarantees that hundreds of thousands of vehicles would solely want utility updates for zero-supervision Complete-Self Riding.
Within the Q1 2026 name, CEO Elon Musk stated that vehicles in keeping with {Hardware} 3 (aka HW3) would want to be retrofitted with each new computer systems and new cameras. The present technology, {Hardware} 4 (HW4), arrived for the Tesla Fashion S, X, and Y in 2023, and the refreshed Fashion 3 in 2024.
HW3 arrived in 2019, and managers were providing hope for software-only FSD upgrades as not too long ago as October 2025 regardless of Musk expressing doubts in January that 12 months.
The corporate already began delivery a mildly upgraded HW4 revision with the Fashion Y in January 2026, and all over the decision previewed a revision (in all probability an AI4.5 Plus or HW4 Plus) that might double RAM to 32GB and ship an estimated 10 % growth to computing energy.
The improve procedure might be elaborate. Musk stated within the name that Tesla was once exploring “micro-factories” in main city spaces to steer clear of overwhelming provider facilities, the place retrofits would reportedly be “extraordinarily gradual.” He did not supply a timeline for when those factories may well be in a position, or when upgrades would start.
The affect might be really extensive. Tesla famous in its profits that there are 1.28 million energetic FSD purchases and subscriptions, and a few shoppers paid up to $15,000 for the choice. Whilst they may not essentially must pay further, they now face waits for {hardware} installations even if unsupervised self-driving is in a position.
The place Tesla goes subsequent in 2026
It is spending billions extra this 12 months to pivot to AI
Musk extensively utilized the Q1 2026 name to stipulate Tesla’s near-term plans, in particular its expansions into AI and autonomy.
He showed that Cybercab manufacturing had begun at Gigafactory Texas, and that the robotaxi was once constructed to satisfy federal protection requirements and may not face the two,500-car once a year requirements exemption cap that limits opponents like Waymo. It will possibly make as many because it likes.
The chief additionally printed that production for the third-generation Optimus humanoid robotic at its Fremont plant is now anticipated to begin in overdue July or August. This may occasionally come only a few months after the top of Fashion S and X manufacturing, and Musk claimed it might be conceivable regardless of the “insanely rapid pace” had to dismantle an current meeting line and set up an entire substitute.
The method shift will come with dramatically greater spending. Musk warned that Tesla’s capital bills (capex) would surge to $25 billion in 2026 to hide its AI efforts, together with production, utility, and information facilities. That is $5 billion upper than Tesla’s earlier top, however Musk argued it was once “smartly justified” for a long run the place the corporate is determined by greater than EVs and effort for earnings.
US EV gross sales dropped in early 2026 for just about everybody excluding Tesla
The top to federal EV incentives was once the primary issue.
Tesla might be depending on EVs within the close to long run
Robotaxi provider and robots are not in a position for high time
Musk was once tempered about expectancies for AI tasks whilst discussing Q1 2026 profits. He anticipated Cybercab manufacturing to be “very gradual” in the beginning, with “exponential” expansion overdue in 2026. Likewise, he is not predicting Optimus robotic numbers the place he up to now claimed Tesla would make 10,000 devices through the top of 2025.
The robotaxi provider itself may be very small. Whilst current provider in Austin has expanded, Tesla solely not too long ago began providing unsupervised rides in Dallas and Houston. San Francisco Bay Space journeys nonetheless require protection drivers, and the corporate solely stated in its shareholder deck that “arrangements [are] underway” for expansions to Arizona, Florida, and Nevada. Upload in prime crash charges and the providing continues to be smartly in the back of Waymo’s multi-city footprint.
The cheap EV could also be key
As such, Tesla continues to be closely reliant on gross sales of human-driven EVs for its near-term earnings. This comprises the long-wheelbase Fashion Y L that simply began checking out on U.S. roads. And whilst Musk did not recognize it all over the decision, there are rumors that Tesla is again to designing an reasonably priced EV that might achieve a much broader target market.
The additional spending on robotaxis and robots is supposed to satisfy long-view aspirations, to not stability its books in the following couple of months or years.
Supply: Tesla (YouTube)
