Elon Musk said Tesla Inc. needs to build and operate what he is calling a “TeraFab” to manufacture semiconductors, a massive undertaking that will cost billions of dollars and mark another expansion beyond what had been the company’s core electric vehicle business.

Tesla reported a steep decline in annual profit Wednesday as it cut car prices to try to fend off growing competition from established automakers like Volkswagen and newer rivals from China.

Tesla CEO Elon Musk, who turned an upstart electric vehicle maker into an industry-changing powerhouse, is pulling the plug on the two models that helped get him there, as he struggles with another quarter of declining profits and car sales.

Tesla says its annual revenue has fallen for the first time as the electric vehicle (EV) maker shifts it focus to artificial intelligence (AI) and robotics.