Elon Musk not pursuing ‘gigacasting’ manufacturing process anymore? What’s happening?

Tesla is gradually withdrawing from its advanced ‘gigacasting’ manufacturing strategy, a notable shift in its production approach amidst decreasing sales and growing competition.

Tesla Model 3. Image credit: Vlad Tchompalov via Unsplash, free license

Tesla has pioneered gigacasting, a revolutionary method involving massive presses that exert thousands of tons of pressure to die-cast large portions of a vehicle’s underbody. Traditionally, these underbodies are assembled from hundreds of separate parts.

Previously, as part of its development of a new small-vehicle platform last year, Tesla planned to manufacture the entire underbody as a single piece. The ultimate aim was to dramatically streamline production and reduce costs.

However, Tesla has now paused this initiative, choosing instead to continue with its established method of constructing vehicle underbodies in three segments: two gigacasted ends and a middle section composed of aluminum and steel frames for battery housing. This tripartite approach has been maintained in the production of its latest models, the Model Y and the Cybertruck.

The decision to postpone this manufacturing innovation reflects Tesla’s broader strategy adjustment, which includes significant cost-cutting measures as it faces declining sales margins, softer global demand for electric vehicles, and increased competition from other EV manufacturers like China’s BYD. In a related move, Tesla reduced its global workforce by more than 10% last month and saw several top executives leave or be dismissed.

These changes also indicate Tesla’s strategic pivot towards enhancing its autonomous vehicle technologies rather than focusing solely on expanding its electric vehicle sales volume, a growth prospect that many investors had anticipated.

This retreat from gigacasting happened last autumn, before Tesla, in late February, decided to stop the development of a new, more affordable vehicle, tentatively named the Model 2, which would have been the first to feature one-piece gigacasting. The cancellation of the Model 2 project was first reported by Reuters on April 5.

On April 23, alongside releasing earnings that fell short of Wall Street’s expectations, Tesla announced a revised, more streamlined approach to manufacturing “more affordable” cars after abandoning the Model 2 project, which had an anticipated price tag of $25,000 and a launch target in the second half of 2025. Instead, Tesla officials stated they would utilize existing platforms and production lines to create these affordable models.

Tesla has not completely forsaken the smaller vehicle platform initially intended for the Model 2. The company plans to repurpose this platform to develop a self-driving robotaxi.

Tesla and Musk have acknowledged that while gigacasting reduces costs in the long term, it demands significant initial investments and is intricate and challenging to refine.

Experts remark that Tesla’s more cautious approach to gigacasting aligns with the difficulties it has historically faced in launching innovative vehicles on schedule. For example, the highly experimental Cybertruck was released last autumn at a much higher price than initially forecasted after significant delays to resolve manufacturing issues. Tesla continues to face challenges in producing the angular, stainless-steel pickup at a mass-market scale.

Postponing the one-piece gigacasting will spare the company from making extensive short-term capital investments in manufacturing and design.