Without this option, rear passengers could not add Bluetooth headphones, and the sound was still played through the car's audio system. Whatever the kids wanted to watch in the rear, it was heard by all in the car. This made the Model S and Model X family-unfriendly options, bested by some of the cheapest minivans on the market. The ability to watch videos in the back and listen to the sound using Bluetooth headphones is bread-and-butter for these family cars.
Tesla finally addressed the problem with the latest software update, 2023.38.8. Surprisingly, it started with the refreshed Model 3, leaving Model S and Model X customers behind, at least for a while. As Model 3 Highland owners in Europe revealed, rear passengers can now pair Bluetooth headphones and listen to a separate audio stream in the back. This means that kids in the back can watch a movie in the Theater app without interfering with the music played through the car's speakers.
Pairing the headphones is done by accessing App Launcher > Rear Display > Settings > Add New Headphones. Conveniently, you can pair two sets of headphones so that two people can share the rear audio stream. They can play any video available in the Tesla Theater app, even when the car is moving. This will undoubtedly make Model S and Model X owners jealous, especially as why they were left aside is still unclear.
Since the change happened with a software update that was also pushed to Tesla's top-of-the-range models, it could be possible that the Model S and Model X are missing the hardware that allows playing two audio streams. If that's the case, having a decorative rear screen will not go down well with people who paid over $100K for their luxury vehicles. Hopefully, Tesla will figure out how to expand this feature to all models with a rear entertainment screen.