2016 Toyota Highlander - Audio issues

At 36,200 miles my radio became erratic. There is no NAV system ,just a radio/CD. Could not switch from radio to CD and vice versa, could not remove cd from player. Next day it would work for a while. Then would stop again. Sometimes touch screen would not work. Was told I needed a new radio as the CD player was not working. I thought it might be an electronic problem, I brought it to dealer and they said it needed an update, whatever that means? and it worked for a few days. Today it stopped working again. Is a new radio the solution or is this an electrical problem and what can be done.

I used to have a Toyota Rav4 with a similar problem. The radio worked fine one day and then none of the buttons would work the next. Sometimes turning the car off then on would fix it, but other times that would have no effect. I ended up finding a factory radio on eBay for about $300. I took the old one out. The new one plugged right in and voila! Never had another issue (with the radio that is). That Rav4 was plagued with problems and I only had it about 3 years.

It appears there were a lot of technical service bulletins regarding bluetooth connectivity from Toyota on this vehicle’s radio.
The update was most likely a firmware update. Did you ask the dealer to swap out the radio for another for free?
There are also a number of complaints registered online that are similar to yours.
If this is a continuous problem, not covered by warranty and the dealer wants an arm and a leg to “look at it,” I’d recommend buying a new radio/cd player.
I just had Kenwood DPX 503BTs put in both my and my girlfriend’s car (she has an iPhone 8 and has had no connectivity problems).
I got mine at Best Buy with free installation for $130 plus cost of the kit needed to fit your vehicle.
But, in general, perhaps in the long run, biting the bullet and getting a non-factory installed radio is the best alternative if you intend on keeping the vehicle.