The new Model 3s are coming with an air compressor
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Tesla's upgraded Model 3 is hitting the roads around the world. With no date set for North America deliveries, we have to rely on Tesla enthusiasts worldwide to tell us what they are finding with the car originally known as the Highland.
Highland Model 3's Air Compressor Accessory
One of the Model 3's new features is the inclusion of an air compressor accessory, setting it apart from other editions. This built-in air compressor is not just a handy tool for tire maintenance, ensuring optimal pressure and thereby improving vehicle efficiency, but it also serves various other purposes. Whether inflating camping gear during outdoor adventures or ensuring sporting equipment is game-ready, the Highland Model 3 positions itself as the ideal companion for those who demand more from their vehicle, both on and off the road.
Smart Shift
The concept of manual gear shifting is evolving, thanks to Tesla's Smart Shift technology. The new Model 3 simplifies the driving process by automatically determining whether to shift the car into reverse or drive. Upon starting, drivers will now be greeted with the "Press Brake to Drive" message on the screen. This eliminates another step from starting the vehicle. Thanks to Tesla's phone key and electric drivetrain, drivers don't need a car key, or a start button, and now they don't even need to shift the vehicle into drive. Just simply hold the brake, to have the vehicle check for a valid phone key and then gently press the accelerator.
Drowsiness Detection: A Lifesaver on the Road
The new Model 3 software has a drowsiness warning that appears on screen
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Safety remains paramount at Tesla. As Green told us a few weeks ago, another safety feature is in the new Model 3 - a drowsiness warning system. Utilizing the cabin camera and advanced algorithms, the system monitors the driver's alertness levels. If it detects signs of fatigue or inattention, a chime goes off and an alert is sent to the driver, prompting them to take a break or be more attentive. This proactive approach to safety could be the difference between a close call and a mishap.
Firmware Updates: An Insider's Note
New Model 3 owners might notice the unique version number: 2023.31.600. This version might seem unusual initially, but Tesla aficionados will recognize this odd-numbered sequence. For new vehicles equipped with factory firmware, Tesla typically uses an odd number after the year in the version to differentiate it. These new Model 3s wil eventually receive the same software updates as other vehicles.
Update: This article has been updated to remove the reference to the ambient lighting cycling through different colors while the Rainbow Road easter egg is activate. Although this could be a feature Tesla implements in a future update, the original video (below) was done manually by having the passenger cycle through the various colors in settings.
Tesla's Rainbow Road easter egg may one day take advantage of the vehicle's ambient lighting
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In this article, we’ll cover Tesla’s updates on Optimus, batteries, and Tesla Energy.
Optimus
Tesla has been working away on their humanoid robot and continues to make progress in software and hardware.
First, Tesla is preparing the Fremont factory for the Optimus pilot production line, which is scheduled for completion later this year. Once it is, wider deployments of Optimus for internal use within Tesla’s facilities are expected as well. Tesla aims to have several thousand Optimus units working in its North American factories by the end of the year once the pilot production line is operational.
Tesla’s goals for production remain extremely lofty - 1 million units per year by 2030. However, they could face some challenges when ramping production.
Key components like the shoulder actuators use specialized permanent and rare-earth magnets, which are currently sourced from China. Due to recent Chinese restrictions on the overseas sale of these magnets, Tesla is seeking an exemption or alternative suppliers. They have not yet looked into modifying the shoulder actuator but will likely do so if they cannot obtain the necessary materials.
Batteries
Batteries are another item that Tesla’s teams have been working on behind the scenes for years now. The second generation of the 4680 - the Cybercell - has been IRA-compliant for some time now. This means that the Cybertruck is eligible for the US Federal EV rebate.
Tesla also achieved the lowest cost-per-kWh of any of its cells with the 4680 battery - and it is potentially one of the cheapest cells being manufactured by any vehicle battery manufacturer at this point. With dry-cathode still being worked on, Tesla may be able to squeeze more optimizations and cost efficiencies from the 4680 cells.
Additionally, Tesla is progressing with its plans for lithium refining and cathode production in the US, both of which are scheduled to commence in 2025. While the company says they’re no longer supply-constrained for non-LFP vehicle batteries, on-shoring production and sourcing critical minerals from nations outside of China will be key.
LFP batteries continue to be supply-constrained, namely for the Tesla Energy division. LFP batteries and their materials are sourced from China. Due to tariffs and limited exports, Tesla can’t obtain enough and is considering potentially building an LFP production facility in North America.
Energy
Tesla’s energy division is still experiencing some of the highest growth of any of its divisions. Year over year, Tesla saw a 154% increase in energy storage deployments, including both Megapack and Powerwall - for a total of 10.4 GWh deployed in just Q1 2025. While deliveries in energy storage remain volatile due to the nature of Megapack installations, Tesla expects growth to continue rapidly in this segment.
Tesla also deployed 1GWh of Powerwall 3 residential storage this quarter, marking its strongest quarter. Powerwall 3 has received positive feedback from customers, many of whom appreciate its new capabilities with its built-in inverter for solar.
Megapack is continuing to see demand increases, currently highlighted by utility-scale Megapack systems, as well as data centers requiring stable power delivery. Megafactory Shanghai is also online now and producing Megapacks - with an annual production capacity of 20GWh today and up to 40GWh in the future. The site has also produced over 100 Megapacks this quarter, which are all awaiting delivery.
There was a lot of interesting news from Tesla’s Q1 2025 Earnings Call, covering everything from FSD and Robotaxi - to the less glamorous but equally important Megapack and Powerwall.
Tesla is heavily leaning into artificial intelligence, and its insurance offering is just another example of how it’s improving its product or lowering costs by leveraging AI.
Tesla recently started offering an insurance discount in select states when drivers use FSD for at least 50% of their drives and now it’s introducing an AI to help handle customer claims.
Tesla has developed an in-house voiced AI agent that can assist customers in handling simple support requests for Tesla Insurance.
For customers calling in from those states, the new AI agent provides a unique way to address the most common support calls. And it’s not just answering common questions but actually making requested changes to the owner’s account.
Policy Changes
The first key item is that it automates policy changes. Simple policy updates, including adjusting your deductible or coverage limits, are now done via AI. For policyholders who are simply looking to make quick changes and don’t have any questions, this makes the process a lot quicker by not having to wait for a representative. Tesla isn’t eliminating representatives, but this could reduce the number of representatives required or reduce wait times.
Continue Where You Left Off
The second item here, highlighted by Raj Jegannathan from Tesla’s internal IT team, is that Tesla’s AI agent is able to offer summaries of the user’s last interaction with Tesla Insurance. It will summarize your last interaction and provide assistance on that particular topic if you need to continue it. That means that you don’t have to wait for a human to review your file - the AI will kick off right where you left off.
Tesla appears to be focused on improving efficiency and making support more accessible. While actual items like claims are left up to humans due to their inherently complex nature, this helps free up employees to handle more complex items. While there’s no doubt Tesla will continue to develop this AI like they do everything else, we may soon see it take on even more tasks.
More AI
This isn’t the first AI agent that Tesla has demoed - there is now a chat-based AI sales agent available on the front page of Tesla’s website, which is able to answer common questions on Tesla vehicles.
Tesla has also been improving their AI support tool available in the Tesla App is able to provide feedback on common issues and also guide users towards either solving the problem or placing a support request.
Tesla’s strategy here is to influence the cost-heavy areas associated with having humans address simple requests and instead leverage AI, which can offer instant answers and reduce support costs.
Roll Out to More States
While this new AI is currently limited to just 12 states, it is likely to follow Tesla Insurance’s expansion. Insurance seems to have been at a bit of a standstill lately. Tesla continues to improve features such as the improvements to Safety Score V2.2, but we haven’t seen Tesla roll out support to new states since it added Minnesota in November of 2022.
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