The Reason Behind Tesla's Recent Layoffs

Tesla faces setbacks with its 4680 battery project and halts the affordable Model 2, resulting in significant layoffs.

Tesla has initiated another round of layoffs amid ongoing challenges with its ambitious 4680 battery project and the discontinuation of the budget-friendly Model 2 vehicle. The company’s senior executives have cited the need to refocus on viable projects and streamline operations as key reasons for the cutbacks.

Former Tesla energy executive Drew Baglino disclosed that production of the 4680 battery has slowed significantly, compounded by high costs at Tesla’s cathode plant in Texas. Described internally as a "financial black hole," the project’s dry cathode production method, integral for cost reduction, has proven more complex and expensive than anticipated. This bottleneck has become a critical issue for the production of Tesla's Cybertruck, further impacting the company’s focus on specialty rather than mass-market vehicles.