Tesla Model 3 Highland may launch with watered down HW4 set like Model Y to lower price

A new report out of sources close to the Shanghai Gigafactory where the Model 3 Highland refresh is expected to make a cameo soon, confirms that it may ship with a stripped down version of Tesla's Hardware 4.0 FSD system. The analyst claims that the Model 3 Highland will come with "HW 3.5, not 4.0, and all radars have been removed," which sounds very much like what Tesla is now doing with the HW4 kit on the Model Y.

A recent Tesla Model Y HW4 computer teardown found that its infotainment chipset comes with half the memory of the Hardware 4.0 kits that Tesla started installing on its premium Model S and Model X vehicles. That computing power downgrade may very well be what the source means when they say "HW 3.5" since they also inform confirm that the Model 3 Highland will ship with the new front bumper HW4 camera that the Cybertruck will also come equipped with. On the Model Y, the HW4 computer has space for extra camera, radar, or audio hardware connectors, like on the Model S/X, but they just sit depopulated.

That means that Tesla can add some of those extra features at will, and it is seemingly exactly what it will be doing for the Model 3 Highland. In essence, it may ship with the reduced computing, graphics, and audio chip power of the Model Y's current Hardware 4.0 kit, but with the full set of HW4 cameras, including the one in the front bumper.

As to why is Tesla fragmenting its lineup when it comes to FSD hardware abilities, it seems that the main driver is cost. Tesla aims to use the Model 3 Highland refresh as a general rehearsal for the drastic 50% production cost cuts that it has to do with its first mass market Model 2 compared to the Model 3, and it has reportedly achieved this goal.

"Single-piece casting, significant reduction in wiring harnesses, and the use of more new materials" mean that "manufacturing cost of the entire vehicle has significantly decreased compared to the older model 3," says the analyst. They still claim that the Model 3 Highland price will start from the equivalent of US$27,000, though, which is the same 14% drop in pricing that was bandied about before. Since the production cost may have dropped more than that, the widened margin may ultimately increase Tesla's profits from each Highland unit.

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