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Tesla Inc. (NASDAQ:TSLA) has reportedly abandoned its pioneering manufacturing process, indicating a shift in strategy for the EV behemoth as it grapples with falling sales and mounting competition.
What Happened: Tesla has stepped back from its ambitious gigacasting plan, Reuters reported, citing two sources familiar with the matter.
The company’s objective was to streamline manufacturing and cut costs by casting large sections of the car's underbody in one piece.
However, Tesla has now reportedly paused this initiative, choosing to continue with its established method of casting vehicle underbodies in three sections.
This move to delay the potential manufacturing breakthrough is another instance of Tesla cutting short-term expenditure as it adapts to declining sales, shrinking profit margins, and escalating competition from rival EV manufacturers such as China's BYD Co. (OTC:BYDDY) (OTC:BYDDF).
Not A Recent Plan? The gigacasting reversal reportedly took place last fall, before Tesla’s decision in late February to cease development of an all-new affordable car, often referred to as the Model 2, which would have been the first vehicle it built with one-piece gigacasting.
During the second-quarter earnings call with analysts, Tesla revealed a simpler, faster plan for manufacturing "more affordable" cars after abandoning plans for the Model 2. Instead, Tesla officials stated, it would produce affordable models using an existing platform and production lines.
Reuters’ sources suggest that Tesla has not entirely discarded the small-vehicle platform it had planned for the Model 2. Instead, it will proceed with the development of a self-driving robotaxi on the same platform.
Why It Matters: Tesla’s gigacasting technique, first used in 2020 for its Model Y SUV, revolutionized the vehicle manufacturing process by casting sizable aluminum body components with casting machines, as opposed to conventional assembly techniques that required welding or stamping of several parts.
This innovation had put Tesla ahead of competitors like Toyota Motor Corp (NYSE:TM), who found themselves struggling to keep pace with Tesla’s production efficiency.
Photo via Wikimedia Commons
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