As far as cost cutting goes, I mostly agree with
@borski that this is a big motivator for the decision. But I do think it's more complicated than that.
At the end of the day, the bulk of Elon's fortune is tied to Tesla's stock price. And that stock price has been grossly overinflated for years, all because he has successfully sold Wall Street on the notion that FSD will be coming "any day now", and once it's perfected, Tesla will not only be able to get all their customers to buy it, it will enable all sorts of other billion-dollar businesses, such as robo taxis, and so on.
There's no math that gets Tesla even close to being worth its stock price by selling cars alone. Especially now that other EV makers are making inroads, and Tesla is no longer the only viable game in town. That's only going to get worse over time.
Cutting costs and increasing the profits on cars is essential to keeping Tesla growing. But they won't get there, no matter how many sensors they take out.
As Wall Street starts waking up to the fact that FSD is not coming anytime soon, the danger of a stock tank becomes very real. In the short term, they can get by with more revenue per sale, but that won't last long.
Selling Wall Street on Tesla's "unique" approach to the FSD problem will keep some entertained for a bit longer, however.
"Look, we can
remove sensors and still outperform our competition. We're obviously the only company that is approaching this correctly." Sure makes it sound like no other automaker is going to be able to catch up anytime soon, though that's pure nonsense. And all the YouTubers out there proclaiming every update is a "huge improvement" when in reality these updates are incremental at best drives the point home further. It plays into the narrative of the genius founder perfectly.
And since that won't last forever, either, becasue the competition absolutely will catch up and surpass Tesla eventually, pivoting to C3PO-type robots that will revolutionize the factory is the next move. (In reality, these robots will likely do little more than what Amazon's robotics already do in its warehouses.)
But that's Elon. He can make a dumb robot look like a sci-fi character and convince Wall Street that it's just as important an innovation as FSD would have been. It's all smoke and mirrors to keep the stock overinflated.
When the robots fail, it'll be something else.
He's not Steve Jobs. He's P.T. Barnum.