Tesla CEO Elon Musk has made a stunning admission, acknowledging that the company's Hardware 3-equipped vehicles, sold between 2019 and 2023, will need an upgrade to support unsupervised self-driving software. This revelation marks a significant setback for Tesla's autonomous driving ambitions, which have been a cornerstone of the company's valuation for years.

Musk's comments, made during a conference call on Wednesday, come as a surprise to many, but not to those who have closely followed the company's progress. Tesla has repeatedly overpromised on its timeline for delivering fully autonomous vehicles, and this latest admission only serves to further emphasize the company's struggles in this area.

The roots of this issue date back to 2016, when Tesla claimed that every car it built had the necessary hardware to support full self-driving capabilities. This promise was central to Tesla's valuation, but it has since been repeatedly walked back. The company's initial "Hardware 2.0" and subsequent "Hardware 2.5" computers were deemed insufficient, leading to the development of "Hardware 3" in 2019. However, even this upgrade was not enough, and Tesla has since moved on to "Hardware 4" computers.

The implications of Musk's admission are significant. Owners of Hardware 3-equipped vehicles will need to upgrade their computers to support unsupervised self-driving software, a process that Musk described as "painful and difficult." This raises questions about the company's ability to deliver on its autonomous driving promises and the potential impact on its valuation.

Despite this setback, Musk remains optimistic, stating that Tesla intends to launch a pilot program in Austin this June to demonstrate its self-driving capabilities. He also claimed that 2025 will be "maybe the most important year in Tesla's history," suggesting that the company is still committed to delivering on its autonomous driving ambitions.

The contrast between Tesla's struggles and the progress made by other companies, such as Waymo, which operates a commercial robotaxi service in multiple cities, is striking. Musk's admission serves as a reminder that the development of autonomous vehicles is a complex and challenging task, and that even the most ambitious companies can face significant setbacks.

As the autonomous vehicle landscape continues to evolve, Tesla's latest admission serves as a cautionary tale about the dangers of overpromising and the importance of delivering on commitments. The company's ability to recover from this setback and deliver on its autonomous driving promises will be closely watched by investors, regulators, and the tech community at large.