China's Race to Lead Humanoid Robotics: The Next Frontier in EV Manufacturing
By Qiaoyi Li and Kevin Krolicki
BEIJING (Multibagger) - China, a global leader in electric vehicles (EVs), is now setting its sights on dominating the humanoid robotics sector, a technological leap that could revolutionize EV production. At the prestigious World Robot Conference in Beijing, over two dozen Chinese firms showcased humanoid robots designed for factory and warehouse work, along with the precision-made components necessary for their assembly.
China's strategy mirrors its successful EV industry blueprint: substantial government backing, fierce price competition, and a robust supply chain. "China's humanoid robot industry demonstrates clear advantages in supply-chain integration and mass production capabilities," said Arjen Rao, an analyst at LeadLeo Research Institute.
President Xi Jinping's policy to foster "new productive forces" in technology underpins this robotics drive, evident in materials distributed at the conference. Beijing launched a $1.4 billion robotics fund in January, followed by Shanghai's announcement in July of a similar $1.4 billion humanoid industry fund.
The robots on display utilize components from domestic suppliers that previously fueled the EV boom, including battery and sensor manufacturers. Goldman Sachs projects the annual global market for humanoid robots to hit $38 billion by 2035, with around 1.4 million units shipped for consumer and industrial uses. The cost of materials to build these robots has dropped to approximately $150,000 each as of 2023, excluding R&D expenses.
"There is big room to squeeze the cost down," said Hu Debo, CEO of Shanghai Kepler Exploration Robotics, inspired by Tesla’s Optimus. His company is working on the fifth iteration of a worker robot, with a target price of under $30,000.
'Catfish Effect' Spurs Innovation
When Tesla inaugurated its Shanghai factory in 2019, Chinese officials anticipated a "catfish effect," where Tesla's presence would accelerate local competitors. Tesla's Optimus robot, introduced in 2021, has had a similar impact. CEO Elon Musk has touted Optimus as potentially "more significant than the vehicle business over time."
Tesla employs an AI approach for Optimus, modeled on its "Full Self-Driving" software for EVs. While Chinese competitors and analysts acknowledge Tesla's lead in AI, they believe China excels in cost-efficient production.
At the conference, Tesla’s Optimus, displayed alongside a Cybertruck, drew significant attention despite being outperformed by more animated Chinese humanoids. A sign next to Optimus declared, "Next year there will be more than 1,000 of my compatriots in the factory."
Tesla reiterated plans to move beyond prototypes to small-scale production of Optimus next year.
Robots on the Assembly Line
UBTECH Robotics, listed in Hong Kong, has been testing its robots in car factories, starting with Geely and recently announcing a trial with Audi in China. "By next year, our goal is mass manufacturing," said Sotirios Stasinopoulos, UBTECH's project manager, aiming for up to 1,000 robots in factories as a step towards large-scale deployment. UBTECH's robots use Nvidia chips, with over 90% of components sourced from China.
Currently, the market for production robots—dominated by firms like Japan's Fanuc, Switzerland's ABB, and Germany's Kuka (owned by China's Midea)—is led by non-Chinese companies. However, China already leads in factory-installed production robots, outnumbering North America's installations by more than threefold, according to the International Federation of Robotics.
China’s vice-minister for industry and information technology, Xin Guobin, highlighted at the event's opening that China has become an "important force in the global robot industry," following Xi's directives. Despite the ambition for mass production of humanoid robots by 2025, LeadLeo's Rao believes large-scale commercial application is still 20 to 30 years away.
Analysis Breakdown
What is this about?
China is leveraging its successful EV industry strategy to dominate the nascent humanoid robotics sector. The country is utilizing substantial government support, competitive pricing, and a strong supply chain to develop robots that could revolutionize manufacturing.
Why does it matter?
This push could significantly lower production costs and increase efficiency in factories, particularly in the EV sector. It represents a technological shift that could impact global manufacturing and labor markets.
How does it affect you?
For consumers, this could mean cheaper and more efficiently produced goods. For investors, it presents an emerging market with significant growth potential. For workers, it might signal a shift in job roles, emphasizing the need for reskilling in a more automated industry.
By understanding these key points, even the least financially savvy individual can grasp the potential impact of China's move into humanoid robotics on the economy and their lives.