Tesla Shifts Manufacturing Strategy Amidst Falling Sales and Rising Competition

Tesla Redwood Aims for Mass Market Impact, Affordable Compact EV Set for Mid-2025 Production

Key Points:

  • Tesla steps back from one-piece gigacasting, opting for its traditional three-piece casting method for vehicle underbodies.
  • The decision reflects Tesla’s broader retrenchment amidst declining sales and increased competition in the automotive industry.
  • Tesla’s strategic realignment includes workforce reductions, executive departures, and a shift toward self-driving technology.
  • Gigacasting pullback precedes the decision to halt development of the Model 2, emphasizing short-term capital savings over ambitious innovations.

Tesla Inc. has altered its manufacturing strategy by stepping back from its ambitious plan for one-piece gigacasting, a cutting-edge manufacturing process aimed at simplifying production and reducing costs. According to sources familiar with the matter, the electric vehicle maker’s decision reflects a broader retrenchment amidst declining sales and increasing competition in the automotive industry.

Gigacasting has been a hallmark of Tesla’s manufacturing innovation, utilizing massive presses to die-cast large sections of a vehicle’s underbody. Initially, Tesla aimed to produce the underbody in a single piece as part of its new small-vehicle platform to streamline manufacturing and lower costs. However, the company abandoned this plan and reverted to its proven method of casting underbodies in three pieces.

The decision to halt the development of one-piece gigacasting represents a significant shift in Tesla’s approach. The company is grappling with dwindling sales and profit margins, global softened demand for electric vehicles, and mounting competition from rivals such as China’s BYD Auto Co., Ltd. Tesla’s recent workforce reductions and executive departures further underscore the company’s strategic realignment.

Tesla’s move away from one-piece gigacasting occurred before the decision to halt the development of the Model 2, an affordable car that was expected to utilize this innovative manufacturing process. Instead, the company announced plans to produce “more affordable” cars using existing platforms and production lines without disclosing specific details or target prices.

Despite shelving the Model 2, Tesla remains committed to developing vehicles on the small-vehicle platform, albeit with a focus on self-driving capabilities. Suppliers involved in gigacasting operations are now adapting Tesla’s three-piece casting process for the next generation of vehicles, indicating a shift in priorities towards self-driving technology.

While gigacasting has long been touted as a cost-saving measure for Tesla, experts emphasize the significant upfront investment and technical challenges associated with the process. Tesla’s decision to prioritize short-term capital savings aligns with its historical struggles in launching complex vehicles on time, as evidenced by delays and production issues with models like the Cybertruck.

Experts suggest that Tesla’s shift in manufacturing strategy reflects a pragmatic approach to addressing immediate market challenges rather than pursuing ambitious yet uncertain innovations. With Chinese EV makers dominating the low-cost EV segment, Tesla focuses on delivering competitive products to consumers amidst intensifying competition.

TechGolly editorial team led by Al Mahmud Al Mamun. He worked as an Editor-in-Chief at a world-leading professional research Magazine. Rasel Hossain and Enamul Kabir are supporting as Managing Editor. Our team is intercorporate with technologists, researchers, and technology writers. We have substantial knowledge and background in Information Technology (IT), Artificial Intelligence (AI), and Embedded Technology.

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