According to a post on X, Elon Musk said that Tesla has yet to unlock the full potential of AI4 – the now-renamed Hardware 4.
HW4 / AI4
AI4 currently runs Hardware 3 in emulation mode, which means it's only running about as fast as Hardware 3 can run. With just basic specs in mind, AI4’s cameras have 4-5x better overall resolution and fidelity than Hardware 3 and should be about 3-5x faster in inference capabilities. That’s a considerable increase over the baseline specs of Hardware 3.
With FSD 12.5, AI4 is running a FSD model that has a 5x increase in parameters, resulting in a smoother driving experience. Recently, Elon Musk noted that AI4 should be able to provide an additional 8x time increase in parameters. While we’re not exactly sure how the parameter metric computes vs the inference capability metric, but if we add them, it’s a 12x increase in capability.
However, Elon’s post implies that this is an 8x increase over the capacity they originally thought to have – nearly 50x faster than Hardware 3. That’s a bold claim, but could entirely be based on software optimization and not having to run Hardware 3 in emulation mode in the future, once AI4 and Hardware 3 begin to diverge.
AI4 Divergence
Divergence is still expected to be a few months away – at least not until early 2025. However, Elon confirmed that the new Supercomputer Cluster, which will run AI4 alongside Nvidia GPUs, is coming online very soon. This means that work on improving FSD with the newly unlocked potential of AI4 is going to start soon – however, it may not necessarily come to customers right away.
FSD on Hardware 3
Currently, most of Tesla’s fleet is still on Hardware 3 – the Model 3 only changed over after the refresh, and the Model Y only changed over in late 2023. Even if AI4 brings drastic improvements, Tesla will still have to focus a lot of energy on optimizing their model so that Hardware 3 vehicles – some of which are less than a year old today, can still run the latest FSD updates.
Musk recently commented on X that Tesla is still optimizing FSD to run on hardware 3. He originally estimated that it would take about 10 days to optimize the code for HW 3, however, that date has come and gone. We’re now on day 15, and HW 3 owners are getting increasingly frustrated about the delay and the worry that HW 3 is reaching its limits.
FSD v12.5.1.3 is currently the latest FSD version available to the public. However, Musk said that this version doesn’t have HW 3 support yet, and it’ll be a new unreleased version that will roll out for HW 3.
In a new video posted to X, Tesla is showing the progress of its first Lithium Iron Phosphate (LFP) cell manufacturing factory in North America. The facility, located in Sparks, Nevada, will be used to produce LFP battery cells for Megapacks and Powerwall.
However, the implications of this new factory extend beyond Tesla Energy. By on-shoring the production of these cost-effective batteries, Tesla is not only securing its energy supply chain but also opening the door to potentially reintroducing LFP-based vehicles in North America.
Nearing completion of our first LFP cell manufacturing factory in North America pic.twitter.com/OLNRWajz4l
The immediate beneficiary of the new Nevada LFP facility is Tesla’s Energy division. LFP chemistry is ideal for stationary storage products like Megapack and Powerwall. It offers a very long life cycle, is extremely thermally stable and safe, and is significantly cheaper to produce than nickel-based batteries, partly because it contains no cobalt.
Until now, Tesla has relied on suppliers like CATL in China for these cells. A dedicated, domestic supply will enable Tesla to dramatically ramp up Megapack production to meet North America’s increasing demand for grid-scale energy. On the other hand, Megafactory Shanghai continues to utilize CATL’s LFP batteries and will support the rest of the world.
Tesla first revealed that they were planning to onshore LFP production in North America at the Q1 2025 Earnings Call, which will help them avoid costs, innovate in new technology, and insulate themselves from geopolitical supply chain risks.
A Potential Return for LFP Vehicles?
Another exciting application for Tesla is what this new factory means for Tesla’s budget-oriented lineup. For years, Tesla has been constrained in its ability to offer LFP-based vehicles in North America. While LFP packs are used in other markets for specific standard-range RWD vehicles, tariffs on important Chinese cells made it difficult to import these cells for use in North America.
With a domestic supply of LFP cells produced in Nevada, this tariff-related barrier will be mostly eliminated, pending the sourcing of lithium from a North American site. This is likely to lead to the reintroduction of LFP-based vehicles to the North American market, possibly in late 2026 or 2027.
An American-made LFP pack could lead to a more affordable base Model 3 or Model Y, or potentially help Tesla cut costs on the next-generation Affordable Model even further. This helps to give customers a lower-cost entry point without sacrificing a lot of range, and with the added benefit of being able to regularly charge to 100%.
Mega Nevada
With Mega Nevada now progressing well, Tesla is in an excellent position to continue iterating on its vertical integration and scaling Megapack and Powerwall—two of Tesla’s fastest-growing businesses—further. There are tons of benefits for consumers in the future as Tesla continues down this path, with more affordable Powerwalls for the home, cheaper electricity prices thanks to grid-forming Megapacks, and cheaper LFP vehicles.
The next major upgrade for Tesla’s in-car experience is pretty much already here - just hiding beneath the surface, awaiting the flick of a switch. According to new details uncovered by Tesla hacker Greentheonly, a fully functional version of the Grok conversational AI assistant is already present in recent firmware builds, just waiting for Tesla to activate it.
The feature, which is currently behind a server-side switch, could be enabled at any time by Tesla for vehicles running update 2025.20 and newer. The findings provide a better picture of what we already learned from Green’s breakdown on Grok last month.
Grok’s Requirements
@greentheonly on X
According to what Green determined from the latest software builds, the foundation for Grok was laid with update 2025.14, with more abilities and functionality added in 2025.20 to flesh it out. He also determined exactly which vehicles will be receiving Grok.
In terms of hardware, any vehicle with a Ryzen-based infotainment computer will receive Grok. This means that vehicles with the older Intel Atom processor will not be supported, at least initially. The underlying Autopilot hardware is not a factor, as Grok’s processing is not done in-vehicle.
Grok will also require premium connectivity or a Wi-Fi connection for the vehicle. At this point, we’re not sure whether Grok in your Tesla will also require you to sign up for SuperGrok, X Premium, or X Premium+, but Tesla is requiring you to sign into your Grok account. It’s just not clear whether the free version of Grok will work, or if you’ll need the premium version.
Grok User Experience
@greentheonly on X
Green also revealed the user interface for Grok for the first time. You’ll find many of the same features from the Grok app, but surprisingly, it looks like it’ll have a dark UI, even if you’re using light mode in your vehicle.
It appears that there will be a Grok app, likely for settings. However, Grok will largely operate in a modal, similar to voice commands, which are displayed near the bottom left corner of the screen.
There’s an on-screen microphone button, as well as drop-down menus for the voice and type of assistant you’d like to use.
Similar to the Grok app currently on mobile devices, you’ll be able to select from a set of voices and then define their personality. The available voices for now are the standard Ara (Upbeat Female), Rex (Calm Male), and Gork (Lazy Male).
There’s also a settings button, which, when expanded, allows you to enable or disable NSFW mode (including swearing and adult topics), as well as a Kids Mode, which will tone Grok down to be suitable for when kids are in the car.
@greentheonly on X
How Grok Will Work (Button / Wake Word)
Users will be able to activate Grok by pressing a button, likely the same one that activates voice commands today. Grok will then remain enabled for the duration of your conversation, allowing you to go back and forth, asking and answering questions. To end your conversation, you’ll press the mic button again.
While it doesn’t appear to use a wake word yet, Green says that some code refers to a wake word, so it’s possible that this could be an option Tesla plans to activate in the future.
Replacing Voice Commands
The most significant implication of Grok’s future integration is in its potential to fully replace the existing and relatively rigid voice command system. Green notes that internally, this feature is part of the car assist module, and that eventually, the plan is for Grok to take over car control functions.
Unlike the current system, which requires specific phrases, a true conversational AI like Grok can understand natural language. This will enable more intuitive requests, completely changing how drivers interact with their car.
Language Support
@Greentheonly/X
Grok will also launch with multi-language support, similar to its current abilities in the Grok app. Green says that it already appears to have support for English and Chinese and one or two other languages.
Release Date
Grok appears ready to go from a vehicle standpoint, but Green wasn’t able to actually test it out. While development appears to be nearly complete in the vehicle, Tesla and xAI may still be working on some server-side changes to better integrate with the vehicle. If they plan for Grok to replace voice commands on day one, then it’ll need to be trained and be able to execute a variety of vehicle commands.
It’s possible Tesla is actively testing Grok or adding server-side changes to replace voice commands. However, it looks like vehicle development is nearly complete and Grok could launch as soon as the next major Tesla update, which is expected to be update 2025.24.
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