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Elon Musk believes that humanoid robots will evolve into a trillion-dollar industry, with Tesla’s Optimus robot potentially generating up to USD 10 trillion in revenue. According to a report from TechNews, citing CNN, while Tesla holds key advantages in the humanoid robotics industry, the landscape has begun to shift over the past three years as the rise of Chinese competitors poses an increasingly serious challenge.
China Replicates EV Strategy to Grow Robotics Industry
As the report highlights, Chinese electric vehicle and battery manufacturers have already proven their capability to compete with Tesla in critical areas such as battery and motor technology. In AI development, the emergence of DeepSeek has further fueled China’s ambitions to close the gap.
Furthermore, the report notes that the Chinese government is actively seeking to replicate the successful strategy it used to develop the EV sector. Over the past three years, cities including Beijing, Shanghai, and Shenzhen have collectively planned to invest at least 73 billion RMB to fund, subsidize, and encourage the growth of the robotics industry, as highlighted by CNN.
AI Technology: The Decisive Battleground in U.S.-China Robotics Competition
Still, the report points out that China faces a significant barrier to dominating the robotics industry. While Chinese firms control over half of the components in the humanoid robot supply chain, one critical element—AI chip production—remains an area where the U.S. still holds a clear advantage over China.
In addition, humanoid robots require highly advanced and precise components—including sensors, motors, and even screws—which remain largely dominated by manufacturers in the U.S., Japan, and Europe. This dominance presents a significant technological hurdle for Chinese companies. However, the report points out that Chinese firms may have identified a potential path forward—by supplying components to Tesla.
Opportunities for Chinese Manufacturers: Supplying Components to Tesla
TrendForce analyst PK Tseng notes that Chinese component suppliers are actively competing for Tesla’s business by frequently submitting samples for evaluation. If successful, they gain valuable feedback from Tesla, allowing them to refine their products. This not only improves their chances of receiving additional orders from Tesla but also strengthens their ability to supply higher-quality components to domestic customers in China.
As indicated by the report, this strategy allows China’s supply chain to steadily improve component quality and eventually compete with European and Japanese products—similar to what Chinese companies have already accomplished in the electric vehicle sector.
According to TrendForce, much like the current AI competition between high-capital and low-cost approaches, the humanoid robotics sector in the US and China reflects their respective strengths. Over the next five years, commercial humanoid robots are expected to exhibit significant price gaps and tiered applications, with regional ecosystems fostering localized production and industrial development.
TrendForce notes that the global humanoid robot market is expected to surpass USD 2 billion in value by 2027, supported by major robotics manufacturers gradually achieving mass production by 2025.
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(Photo credit: Tesla)
