Tesla (TSLA) is now under pressure after its CEO, Elon Musk, admitted that millions of customers were sold Full Self-Driving (FSD) packages on promises that could never be kept. On the Q1 2026 earnings call on Wednesday, April 22, Musk confirmed that Hardware 3 (HW3), installed in millions of Teslas between 2019 and 2023, simply cannot achieve unsupervised autonomous driving, directly contradicting years of assurances from the company
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Trade TSLA with leverageAs a result, Tesla is now shifting toward its newer Hardware 4 (HW4) system and possible vehicle retrofits. But with execution timelines vague, class action lawsuits mounting, and profitability already thin, investors are reassessing Tesla’s self-driving ambitions and what they mean for the stock.
Tesla’s False Self-Driving Claims Raise Fresh Questions
Tesla previously positioned HW3 as a hardware capable of enabling full autonomy. Many vehicles were sold under the expectation that their self-driving features would improve over time. However, the system still requires active human supervision despite the branding.
Musk has now confirmed that HW3 does not support unsupervised FSD units, linking the limitation to memory bandwidth constraints within the system. The confirmation has now reinforced doubts about Tesla’s earlier autonomy timeline.
Additionally, attention is now shifting toward HW4-based systems and upgraded hardware plans. Tesla has said it is also considering modifying existing vehicles already on the road. However, this could significantly increase total costs over time.
Cost and Trust Issues Put Pressure on Execution Timeline
Tesla’s retrofit strategy may require smaller production setups across different cities. Upgrading a large fleet is expected to be expensive and operationally complex. This comes as Tesla continues to operate under tight margin pressure.
Some customers have raised concerns over delayed or unfulfilled FSD expectations. Legal actions have also added pressure on the company’s reputation. These developments are contributing to weaker confidence in long-term delivery timelines and in the stock’s price, which currently sits around $375.
Is Tesla a Good Stock to Buy?
Analysts tracked by TipRanks have delivered a Moderate Buy consensus rating for Tesla (TSLA). Due to its leadership in the EV and AI sector, some analysts maintain an upside potential but reiterate their Hold rating. However, over the last few days, more bearish forecasts have emerged, with Wells Fargo (WFC) predicting a staggering 66.75% downside to $125 for TSLA. Investors who wish to track TSLA’s ratings, price targets, and performance can get more details on the TipRanks Stocks Comparison Center.
