Tesla shuts down major project once touted as the company's "secret sauce": "Was supposed to ... make the algorithm smarter"

Teslahas taken another fork in the road that could have major implications down the line.

According toThe Verge, the move could be a success or a disaster for theElectric vehiclepioneer. Either way, Tesla is experiencing brain drain as its top talent seeks opportunities elsewhere.

What's happening?

In early August, Bloombergreportedthat Tesla was shutting down efforts to build Dojo, an in-house supercomputer meant to train autonomoustechnology.

Peter Bannon, who led the project, left for Density AI along with 20 other former Tesla engineers.

In a note to clients, Gordon Johnson, founder and CEO of GLR Research, referred to Dojo as Tesla's "secret sauce" for self-driving cars and humanoid robots, according toThe Verge.

The system was supposed to hoover-up data from Tesla's fleet and crunch it to supposedly make the algorithm smarter," Johnson wrote. "Analysts even bought the hype, with Morgan Stanley in 2023 slapping a $500 billion fantasy valuation to boost [Tesla] on Dojo's potential.

Why is Tesla's Dojo decision important?

Tesla's pivot and continuedTalent Exodusare raising serious questions about whether the company will be able to fulfill its promises — and that could further damage consumer and investor trust in the company's efforts to drive progress toward a cleaner, cooler future.

Other key Tesla departures include Milan Kovac, head of engineering for Optimus;David Lau, Vice President of Software Engineering; andOmead Afshar, who led manufacturing and sales in Europe and North America.

These changes have occurred during a turbulent first half of 2025 for Tesla, withlagging sales,plummeting profits, andvolatile stocksshaking confidence in the company.

What is Tesla doing after the end of Dojo?

For his part, Tesla CEO Elon Musk portrayed the shift away from Dojo as a positive move after Bloomberg published its report.

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Muskwroteon X: "It doesn't make sense for Tesla to divide its resources and scale two quite different AI chip designs. The Tesla AI5, AI6 and subsequent chips will be excellent for inference and at least pretty good for training. All effort is focused on that."

In the future, Tesla is expected to rely more on external partnerships for its in-house technology. Bloombergpointed toThe company's $16.5 billion deal with Samsung through 2033 for semiconductors is an example of this shift and underscored Musk's comments from last year in which he called Dojo "a long shot."

The VergeaddedThat is how one's view of the abandonment of Dojo may depend on their opinion of Tesla more broadly. While globalappetite for EVsremains robust, suggesting consumers aren't easily swayed from adopting eco-friendly technologies, Musk's polarizing political activities have contributed to an image crisis for the brand.

Nevertheless, the publication argued "investors could end up rewarding Tesla for winding down its Dojo project and conserving its resources, especially as rising EV competition and the loss of government tax breaks continues to be a drag on the company's core"business.

It noted that Tesla stock rose 2.5% in the early aftermath of the confirmation to abandon Dojo.

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Tesla shuts down major project once touted as the company's 'secret sauce': 'Was supposed to ... make the algorithm smarter'first appeared onThe Cool Down.