Tesla is accelerating its shift toward artificial intelligence and robotics, while the United States' electric carmaker reported the first-ever decline in its annual revenue.

In an earnings call last week, CEO Elon Musk said the third-generation version of its Optimus humanoid robot will be unveiled in the first quarter of 2026, noting it will include "major upgrades, including our latest hand design".

Musk added that Tesla would gradually wind down production of its premium S and X models at its Fremont plant in California and repurpose it to manufacture the Optimus robot, aiming for an annual output of 1 million units.

"That is slightly sad, but … it's part of our overall shift to an autonomous future," he said, adding that the company would continue to support the vehicles for as long as people have them.

At the World Economic Forum in Davos in mid-January, Musk said it will make its Optimus robots available for sale to the public by the end of 2027.

In January, Tesla updated its official mission statement to "build a world of amazing abundance", emphasizing AI, robotics and energy solutions as tools to create prosperity and abundance for humanity and marking a step forward from its previous mission "to accelerate the world's transition to sustainable energy".

Besides its robot plan, Tesla plans to expand its robotaxi service, which is now available in Austin, Texas, and San Francisco, California.

Tesla said over 500 Model Ys have been deployed for the service, with their numbers expected to double on a monthly basis.

The Cybercab, which was specifically designed as a robotaxi, is currently undergoing winter tests in Alaska and is scheduled to start production in April.

Tesla said this model, without pedal and steering wheel, will eventually far outnumber all its other models combined.

Also, for the first time, Tesla disclosed the number of full self-driving subscriptions last week, which doubled last year to 1.1 million, roughly 12 percent of all its cumulative vehicle sales.

Despite the name, the FSD system still requires human supervision in the driver's seat, and Musk's claims about its capabilities have drawn scrutiny from US traffic safety regulators.

Musk said the company expects regulatory approval for its "full self-driving" software in Europe and China in February.

The marked pick-up in speed toward robotics and autonomous driving comes as Tesla faces greater pressure in its automotive business.

Revenue fell 3 percent to $24.9 billion in the fourth quarter, in line with the average analyst estimate of $24.8 billion.

That brought Tesla's 2025 annual revenue to $94.8 billion, 3 percent lower than 2024, marking the first annual decline in the company's history and the lowest revenue in five years.

Tesla also lost its position as the world's largest EV maker to China's BYD. Last year, it sold 1.64 million vehicles worldwide, over half produced at its Shanghai factory, down 8.6 percent year-on-year. BYD, by contrast, sold 2.26 million units.

In Europe, the decline was even more pronounced, with new registrations dropping 21 percent as Tesla faced mounting competition from both Chinese and European EV brands.

In China, Tesla delivered 627,000 vehicles last year, 38 percent of its deliveries globally but around 30,000 units fewer than in 2024.

Total passenger vehicle sales in China rose 8.8 percent year-on-year to 29.6 million units, according to the China Passenger Car Association.