China Making Big Strides in Building Humanoid Workers

After Chinese companies dominated the market for electric vehicles, they have set their eyes on the new target. They are trying to take down Tesla (TSLA) in the race to build battery-powered humanoids expected to replace human workers building EVs on assembly lines.

At the World Robot Conference this week in Beijing, over two dozen Chinese companies showed off humanoid robots designed to work in factories and warehouses, with even more displaying the made-in-China precision parts needed to build them.

China's push into the emerging industry draws from the formula behind its initial EV drive more than a decade ago: government support, ruthless price competition from a wide field of new entrants and a deep supply chain.

"China's humanoid robot industry demonstrates clear advantages in supply-chain integration (and) mass production capabilities," said Arjen Rao, analyst at China-based LeadLeo Research Institute.

The robotics effort is backed by President Xi Jinping's policy of developing "new productive forces" in technology — a point made in brochures for this week's event.

The city of Beijing launched a US$ 1.4 billion state-backed fund for robotics in January, while Shanghai announced in July plans to set up a US$ 1.4 billion humanoid industry fund.

The robots on display this week draw from some of the same domestic suppliers that rode the EV wave, including battery and sensor manufacturers.

Goldman Sachs forecast in January the annual global market for humanoid robots would reach US$ 38 billion by 2035, with nearly 1.4 million shipments for consumer and industrial applications. It estimated the cost of materials to build them had fallen to about US$ 150,000 each in 2023, excluding research and development costs.

"There is big room to squeeze the cost down," said Hu Debo, CEO of Shanghai Kepler Exploration Robotics, a company he co-founded last year inspired by Tesla's humanoid robot Optimus. "China specialises in fast iteration and production."

Hu's company is working on its fifth version of a worker robot to trial in factories. He expects the sales price to be less than US$ 30,000.

'Catfish Effect'

When Tesla opened its Shanghai factory in 2019, Chinese officials said they expected the EV pioneer would have a "catfish effect" on China's industry: introducing a large competitor that would make Chinese rivals swim faster.

Tesla's Optimus robot has had a similar effect, Hu said.

The US automaker first introduced Optimus in 2021, which CEO Elon Musk then touted as potentially "more significant than the vehicle business over time".