AUSTIN, Texas, May 1 (Reuters) – Tesla (TSLA.O) has retreated from its ambitious plans for advancements in gigacasting, its pioneering manufacturing process, according to two sources familiar with the matter. This move signifies the electric vehicle maker’s retrenchment amid declining sales and escalating competition.
Tesla has been at the forefront of gigacasting, an advanced technique utilizing massive presses with thousands of tons of clamping pressure to die-cast large sections of a car’s underbody. Typically, a vehicle’s underbody comprises hundreds of individual parts.
Last year, as Tesla was developing a new small-vehicle platform, it aimed to fabricate the underbody in a single piece. Reuters exclusively reported this in September, citing five sources familiar with Tesla’s gigacasting operations. The ultimate goal was to drastically simplify manufacturing processes and reduce costs.
However, Tesla has since halted this effort and opted to continue with its more established method of casting vehicle underbodies in three pieces. This involves two gigacasted front and rear sections and a midsection made of aluminum and steel frames to house batteries. This approach mirrors the three-piece method used for its last two new models, the Model Y crossover SUV and the Cybertruck pickup.
Tesla’s decision to retract from one-piece gigacasting has not been previously disclosed. The company did not respond to requests for comments.
The choice to postpone this potential manufacturing breakthrough is another example of Tesla reducing short-term spending as it adapts to declining sales and profit margins, softer electric vehicle demand worldwide, and increased competition from rival EV manufacturers like China’s BYD. Last month, Tesla laid off over 10% of its global workforce, and several senior executives have either resigned or been ousted.
These actions also signify a fundamental shift in strategy, with Tesla now placing more emphasis on developing self-driving vehicles rather than solely focusing on substantial growth in EV sales volume, as many investors had anticipated.
The decision to step back from gigacasting occurred last autumn, before Tesla announced in late February that it would cease the development of an all-new affordable car, often referred to as the Model 2. This vehicle would have been the first to utilize one-piece gigacasting. Reuters first reported the cancellation of the Model 2 on April 5.
During an earnings release on April 23, Tesla revealed that it had a simpler, faster plan for producing “more affordable” cars after shelving plans for the Model 2, which was expected to cost $25,000 and be released in the second half of 2025. Instead, Tesla announced that it would produce affordable models using an existing platform and production lines. CEO Elon Musk declined to provide specifics on the planned new offerings or their target prices during an investor call.
Despite abandoning the small-vehicle platform planned for the Model 2, Tesla will proceed with developing a self-driving robotaxi on the same platform. One of the sources familiar with Tesla’s gigacasting operations stated that the involved suppliers are now adapting Tesla’s three-piece process for the next-generation vehicle.
Both sources indicated that Tesla decided last autumn to halt work on the more innovative and challenging one-piece casting process. At the time, the rationale for this decision was to expedite the development of the now-canceled Model 2 and avoid potential costly delays or manufacturing issues.
SIGNIFICANT INITIAL INVESTMENT
Tesla and Musk have touted gigacasting as a means to reduce costs over the long term. However, experts in automotive manufacturing note that the process requires substantial initial investments and is challenging and time-consuming to perfect.
Vehicle manufacturing experts assert that Tesla’s more cautious approach to gigacasting is unsurprising and partly reflects the difficulties the company has historically faced in launching complex and innovative vehicles on schedule. The highly experimental Cybertruck, for instance, arrived last autumn at a significantly higher price than anticipated after substantial delays due to manufacturing issues. Tesla continues to struggle with mass-producing the angular, stainless-steel pickup truck.
By postponing one-piece gigacasting, Tesla avoids making significant short-term capital investments in manufacturing and design. Terry Woychowski, president of U.S. engineering company Caresoft Global, who has led teardowns and engineering analyses on various vehicles, including Teslas, commented that while Tesla would have preferred to execute the process in one piece, the cost implications need to be considered.
James Womack, a vehicle manufacturing expert and former research director at the Massachusetts Institute of Technology, stated that Tesla’s retreat from gigacasting reflects the company’s rush last year to introduce a new $25,000 car to compete with Chinese EV manufacturers dominating the low-cost EV segment.
Womack added that pushing forward with an innovative production technique wouldn’t necessarily aid in selling Tesla cars to consumers, as it might not be perceived as exciting or impactful. Additionally, the cost-saving potential remains uncertain.
