It’s happening… According to an internal memo viewed by Business Insider, Tesla is expanding its Robotaxi Network to a new city. This expansion will take place in the San Francisco Bay Area and marks the first Robotaxi expansion.
According to Business Insider, this timeline was accelerated following the success of Robotaxi in Austin. Following a discussion with our own source, the rollout is expected to begin on Sunday morning. Interestingly, this timeline lines right up with the conclusion of the X Takeover event in San Mateo, which several Tesla executives are likely attending.
This launch will mark the second city for Tesla’s ride-hailing service, following its debut in Austin. As with Austin, the service will be invite-only for some Tesla owners, who will be able to hail and pay for rides via the Robotaxi app.
What to Expect
For this initial deployment, the Robotaxis will still be deployed with a human safety monitor, but with a catch. Unlike the Austin deployment, where the monitor sits in the passenger seat, the Bay Area monitors will be in the driver’s seat. This is a critical distinction, and for all intents and purposes, a safety driver. This is due to regulatory reasons, which we’ll dive into.
The service will operate within a geofenced area covering a wide swath of the Bay Area. The memo mentions that the area should cover Marin, San Jose, and much of the East Bay area. Tesla will once again be using the modified Model Ys it uses for the Austin Robotaxi Network - equipped with a second telecommunications unit.
We’re expecting Tesla to send out a round of invites in the coming days for owners local to the Bay Area.
Regulatory Grey Area
While the launch is a landmark moment for Tesla, there’s an interesting story behind just how they’re navigating the rollout of Robotaxi, given California’s complex regulatory environment. The presence of a safety monitor in the driver’s seat isn’t a precaution - it is exactly the way Tesla intends to push the deployment until formal federal regulations supersede municipal and state regulations on autonomous vehicles.
According to the California DMV, Tesla has a permit for testing FSD with a safety driver, but has not yet secured a permit for driverless testing or deployment. The California Public Utilities Commission (CPUC), which regulates ride-hailing services, has also not received an application from Tesla for a commercial public service permit as of early July, according to Business Insider.
By keeping a fully capable monitor in the driver’s seat, Tesla appears to be operating in a regulatory grey area. The service could be defined as a “chauffeured ride-hailing service” that uses FSD as an “advanced driver-assist” feature, rather than a fully autonomous service. This allows Tesla to continue operating under its existing testing permits while it continues to work with the DMV and CPUC to obtain approval.
Elon previously mentioned that the Bay Area regulators have been extremely reasonable, so this strategy was likely developed in conjunction with the regulators to start the rollout early and obtain regular permitting as operations continue.
This is definitely a bold first step outside of Austin, and we’re happy to see that Tesla is pushing hard on expanding the Robotaxi Network. This allows Tesla to gather invaluable data on FSD performance in another dense and challenging environment, while also adding more paying customers to its network. Tesla also plans to expand to Florida and Arizona, as well as other US states and cities by the end of 2025, so there will definitely be more to come.
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Tesla has gone all out, closely integrating the Tesla Diner into its vehicles and the Tesla app to create an exceptional Tesla experience.
The Tesla Diner also includes high-quality and sustainable food and exclusive Tesla merchandise to round out the experience.
Read on to learn how Tesla improves the take-out and dining experience of a restaurant by integrating it into its vehicles.
Ordering
The unique experience begins well before you even arrive at the Diner. When you choose to navigate to the Tesla Diner, you’ll receive a prompt in your vehicle about an hour before you’re scheduled to arrive.
The diner’s menu is built right into your vehicle - you can tap and scroll through the menu on the main display, adding items to your order. The menu is designed for a larger touchscreen, similar to those found in kiosks at Dunkin’ Donuts or McDonald’s.
In Car Delivery
So let me get this straight… it’s 2025, and I’ll be driving from Texas 🤠 to the @Tesla Diner in LA… as I approach Hollywood, I can pre-order burgers, dogs, fries, and drinks 🍔🌭🍟🥤 straight from my in-car UI… charges my @Tesla account, food served fresh as I pull into the… pic.twitter.com/Ogfl2gkKMb
Once you’re complete with your order, you can choose to dine in, pick up, or have the food delivered to your vehicle. The magic sauce here is that you don’t need to choose the time to have your food ready. Tesla automagically knows when you’re arriving and will have your food ready for you.
However, that’s not all. If you choose “In Car,” staff from the diner will bring your food out to you when you arrive. How will they know where you are? When you plug in at a Supercharger, the vehicle automatically communicates the stall number to the diner, letting them know you arrived and which Supercharger stall you’re in.
If, for some reason, your food isn’t ready when you arrive, you’ll automatically receive a message in your vehicle, letting you know that your food is being prepared.
Drive-In Movie
When you arrive at the diner, you’ll be offered to sync up your audio and video in the vehicle with the two large 45-foot LED screens. You’ll hear the audio right through your car’s speakers, no manual syncing or FM radio required. Your vehicle’s screen will also play the same video that’s displayed on the larger outdoor screens.
There’s now a Tesla Diner app that appears in Tesla Theater when you’re near the diner. This app lets you watch and listen to the movie or order additional food.
Payment
Similar to the food integration, Tesla’s payment solution is also seamless. Food payment is handled automatically through your payment options in the Tesla app, just as Supercharging is automatically billed.
In a classy move, Tesla automatically covers gratuity for its staff.
High Quality Diner Fare
Not a Tesla App
While one might expect standard fast-food fare, Tesla has made a deliberate effort to serve higher-quality food, focusing on responsibly sourced local ingredients. Tesla states that the vast majority of the ingredients are sustainable, local products available within a full charge of a Tesla, which means the Diner is sourcing directly from local farms.
We’d expect this commitment to be maintained when Tesla begins expanding their diners. Future Tesla Diners may serve local specialities rather than just classic diner fare.
Here’s a list of what Tesla does to maintain quality for the food:
Breakfast items use organic eggs from pasture-raised chickens, fed with all-vegetable grains
Bacon comes from heritage-bred pork
Flour tortillas are made with heritage organic wheat
Kombucha uses 100% raw, organic ingredients, and the yogurt and milk are also organic
Cheese is made without phosphates, starches, acids, or fillers
The fries are cooked in beef tallow
Tesla has put a lot of time and care into creating a great experience and menu. The food also comes in a neat little Cybertruck box if you’re ordering a burger or sandwich. Just remember there’s a rule when it comes to the box…
If you eat at the Diner, you must wear your burger box as a hat once you’ve finished your meal.
It wouldn’t be a special Tesla destination without some exclusive destination merch. Tesla offers a range of Diner-exclusive merchandise, as well as additional items available in the Tesla Shop, including classics like the Levitating Cybertruck and more.
The exclusive merch includes:
A Tesla Bot for Tesla Diner (unique to the Diner, all black, with special Diner-related items)
Tesla Retro Diner Tees and Hoodies
Tesla Retro Diner Lamp
Tesla Sweets - Supercharged Gummies
Tesla Diner Hats
Tesla Diner Pins, Salt/Pepper Shakers, and Drinking Vessels
Some of this merchandise, including the unique Diner Optimus, has been marked as having limited-time availability - so if you want it, you’ll want to get your hands on it soon.
Tesla’s Diner is a perfect expression of Tesla’s entire brand experience - seamless and premium. It combines the convenience of in-car tech with a fun, retro-futuristic atmosphere and a genuine commitment to food quality.
The Q2 2025 Earnings Call provided us with a lot of information - and much of it related to FSD. There’s a lot of major news to unpack that impacts HW3 owners, AI4 owners, and future purchasers waiting for AI5.
Tesla addressed the previously promised upgrade for HW3 owners, talked about HW4 and also gave us dates of when to expect HW5 (AI5) and beyond.
The HW3 Upgrade
One of the biggest updates from the call was the clarification on the promised hardware upgrade for millions of owners with HW3 (AI3) vehicles. For those hoping for a path to the newer AI4 or future AI5 FSD computer, Tesla has confirmed that this upgrade is on hold until they can solve autonomy.
As we talked about in our HW3 upgrade article, Tesla will not consider offering such a complex and costly upgrade until after FSD Unsupervised is solved and becomes available to customer vehicles. The reasoning is that an upgrade could potentially involve more than just a simple computer swap, potentially requiring changes to other core vehicle components.
The key here is that the power and cooling requirements for HW4 hardware are far greater than those available in HW3 vehicles. If this trend continues with AI5, Tesla will need to build a customized solution for HW3 upgrades that falls somewhere in the middle - capable enough to perform FSD Unsupervised, but still able to fit within the required tolerances.
Camera Upgrades Might Be Needed
In addition, while Tesla has stated that they don’t intend to swap the cameras, this may become a requirement for two reasons. HW3 already has considerable difficulty reading signs, and HW4 is marginally better at doing so. Complex signs, such as “No Right Turn on Red,” could indicate that HW3 vehicles may require a camera upgrade, at least for the primary cameras, if not the side repeaters, bi-pillar, and rear cameras, to comply.
These changes will also require extensive rewiring, as the wiring in HW3 vehicles is not capable of the higher bandwidth required for higher-res cameras. The lack of future-proofing for HW3 vehicles is definitely becoming apparent here.
The second reason is the inclusion of the forward bumper camera on more of Tesla’s fleet. Today, every new vehicle except the Model 3 comes with a bumper camera. While Tesla does not use it for FSD yet, we believe that it will be necessary for low-speed maneuvers in crowded locations and parking lots - the key to making Summon and Banish truly autonomous.
Essentially, for the foreseeable future, HW3 vehicles will continue to be developed on a lagging, separate FSD software branch. Tesla intends to release updates for HW4 vehicles first, then take the time to optimize them, and then release updates for HW3 vehicles once they are ready. Realistically, while HW3 vehicles will still receive FSD updates, it seems that they have reached their physical operational limits and will not achieve the same performance or have all the same features as AI4 or future AI5 vehicles.
HW4’s Unsupervised Capabilities
The earnings call yesterday reinforced the capability of the current-generation HW4 hardware, which is included in all new Tesla vehicles. This is the same hardware that is powering the current Robotaxi FSD fleet that is currently operating and expanding in Austin. This confirms that HW4 is fully capable of supporting a true, driverless experience.
The question going forward will be what the limits of HW4 are, and how soon Tesla is approaching them. Will Tesla provide a smoother path to upgrade HW4 to AI5?
Given the ongoing situation with HW3, we don’t expect that they will. Tesla is contractually bound to provide Unsupervised FSD (autonomy) with the purchase of FSD, but it’s not required to upgrade vehicles so that they can achieve a higher level of safety and comfort. As long as a vehicle is capable of autonomy, then Tesla has met their commitment.
At this point, we don’t expect a clean upgrade path to AI5 - Elon has previously mentioned that it will consume nearly 2-3x the energy of AI4, which means an entirely new electrical and cooling package will be required for AI5, which AI4 vehicles won’t be able to easily support, short of a major retrofit.
However, if you want Unsupervised FSD and are satisfied with not getting a potential upgrade in the future, AI4 is a very compelling choice today. It is already demonstrably capable of Unsupervised FSD, which means you’re getting a vehicle that can and will do autonomy in the future.
If you’re still undecided about a purchase, a 48-month lease could be the most sensible option. Tesla is not intending to introduce AI5 until the end of 2026, and it will likely take months or years for the software divergence between HW4 and AI5 to occur.
AI5 is a Performance Jump; AI6 is a Leap
Tesla also provided the first concrete details on its next-generation FSD hardware, which will be known as AI5. The new computer is projected to be 3 to 5 times more capable than the already powerful HW4 hardware. That’s a massive leap in processing power, which will enable more complex neural networks and faster, more human-like decision-making.
This next-generation hardware isn’t expected to reach mass production until at least the end of 2026 - and the first vehicles receiving it will likely be Tesla’s Cybercab.
Going forward, Tesla intends to use AI6 as a means to closely integrate the training hardware and the vehicle hardware. That means that its Dojo supercomputer chip will live in AI6 vehicles. Two chips in a vehicle or on board an Optimus humanoid robot, while hundreds will live in a training cluster.
Tesla already uses HW4 hardware in Cortex, its Supercompute training cluster at Giga Texas. However, the vast majority of the training hardware is built around Nvidia’s H200 chip, which means Tesla needs to build the training software for the H200, then rebuild the trained models for HW4 hardware.
This change to Dojo training compute and Dojo in-vehicle compute means that Tesla will be able to further optimize the process, simplifying the entire training pipeline.
Closing One Door, Opening Another
The Q2 call was filled with interesting facts that drew solid lines in the sand for what Tesla’s future hardware path will look like. For owners of HW3 vehicles, the path to next-generation hardware is on hold, but at least there’s some clarity.
However, Tesla is offering FSD transfers in many regions worldwide, including North America and Europe, as a way to upgrade customers to newer vehicles equipped with hardware capable of running the latest FSD version.
For current HW4 owners, their vehicles are already equipped with the hardware capable of running in an Unsupervised future, and can look forward to support for at least another few years. In the future, Tesla vehicles will be equipped with even more powerful hardware, including AI5 in late 2026 or early 2027, and AI6 several years later.
If you missed any part of Tesla’s earnings call and its Q&A session, be sure to check out our recap, where we cover everything Tesla talked about, including FSD Unsupervised, the Robotaxi, and much more.
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