Tesla has been mass producing bespoke AI hardware for four generation.

It's not a hardware problem for Tesla. They are a trillion dollar vertically integrated manufacturing powerhouse.

Not an insurmountable problem for sure. If Level 4 self driving requires more compute in the car, someone has to physically put more compute in the car, which may require redesigning something to do retrofits, etc. A "FSD" car today may not actually have Full Level 4 Self Driving when Tesla finally rolls it out.

Thus it's a hardware problem.