Tesla reveals first annual revenue decline, shifts focus to robotics and AI

Elon Musk says Optimus will become available to the public by the end of next year

Rowan Dunne

Published

2 hours ago

Tesla Inc (NASDAQ: TSLA) (ETR: Tl0) reported its first annual revenue decline in history on Jan. 28. The electric vehicle pioneer has been navigating intense competition in its core automotive business and now aims to pivot to AI and robotics as its primary focus.

For 2025, the company posted full-year revenue of US$94.8 billion, down 3 per cent from 2024. Vehicle deliveries slid by 8.6 per cent year-over-year, the steepest annual drop on record.

Tesla lost its lead as the world’s largest EV maker to China’s BYD Ord Shs H (OTCMKTS: BYDDF), which shipped over 2.25 million units throughout 2025. Several factors contributed to Tesla’s revenue decline, including heightened competition from other lower-priced Chinese rivals, the expiration of certain U.S. EV tax incentives and backlash linked to CEO Elon Musk’s political activities.

Despite Tesla’s electric vehicle challenges, the company has voiced enthusiasm about tech endeavours outside of the EV sphere. Tesla recently updated its mission to prioritize building “a world of amazing abundance” through AI, robotics and energy solutions.

Musk notified World Economic Forum attendees in Switzerland last month that Tesla should be making Optimus robots publicly available by the end of next year. They will have multiple applications in home and workplace settings. This announcement coincides with the company’s plans to repurpose its Fremont, California factory to manufacture the humanoids and plans to phase out production of the Model S and Model X vehicles next quarter.

Elon described the move as being “slightly sad” but said it was essential for contributing to an autonomous future on the planet.

Next-gen Optimus coming in Q3

The Fremont complex will be targeting 1 million Optimus robots per annum. In this year’s third quarter, Tesla plans to unveil the latest and greatest third-generation Optimus model. It will feature significant upgrades, including superior hand design. Initial production will ramp up slowly with mass volume not anticipated until near the end of 2026.

Tesla has also been expanding autonomy initiatives. Robotaxi services now operate in pilot initiatives within Austin, Texas, and San Francisco, California, using over 500 Model Y vehicles. The fleet size is projected to grow immensely, potentially doubling month-over-month for a time.

Additionally, production of the new fully autonomous Cybercab, a vehicle with no pedals or steering wheel, is slated to commence in April after winter testing activities in Alaska. Musk expects the number of Cybercabs to eventually trump all of the company’s other EV models combined.

Despite the revenue loss in 2025, Tesla’s energy generation and storage segment shone brightly in the financials with Q4 revenue shooting up 25.5 per cent to a record US$3.84 billion.

This year, the tech giant has committed to spending US$20 billion to support its ongoing AI, robotics, factory development, energy storage and autonomous vehicle ambitions.

11M Optimus robots sold in a year at ~$30,000 is $330 billion in revenue for Tesla.

Things are going to be crazy. pic.twitter.com/RHgQVeNTCf

— Nic Cruz Patane (@niccruzpatane) November 10, 2025