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China dominates the electric vehicle market. Now it is catching up with Tesla in the race to build battery-powered humanoid robots that are expected to replace human workers on assembly lines that build electric vehicles, Reuters reported.

At the World Robot Conference in Beijing this week, more than two dozen Chinese companies showcased humanoid robots for use in factories and warehouses, and many more displayed the precision, Chinese-made parts needed to build them.

China’s push into the nascent industry draws on the approach that initially drove electric vehicle development more than a decade ago: government support, brutal price competition from a host of new entrants and a deep supply chain.

Arjen Rao, an analyst at LeadLeo Research Institute in China, said: China's humanoid robot industry has shown obvious advantages in supply chain integration and large-scale production capabilities.

In January, Beijing launched a $1.4 billion government-backed robotics fund, while Shanghai announced plans in July to set up a $1.4 billion humanoid robot industry fund.

The robots on display this week come from a number of domestic suppliers that are also riding the electric vehicle wave, including battery and sensor makers.

Goldman Sachs predicted in January that the global annual market for humanoid robots will reach $38 billion by 2035, with shipments of nearly 1.4 million units for consumer and industrial applications. The firm estimates that by 2023, the material cost of making these robots, excluding research and development costs, will fall to about $150,000 per unit.

Hu Debo, CEO of Shanghai Kepler Exploration Robotics Technology Co., Ltd., said: There is a lot of room for reducing costs.

Hu Debo co-founded the company last year, inspired by Tesla's humanoid robot Optimus Prime.

“China excels at rapid iteration and production.”

Hu's company is developing a fifth-generation worker robot for trials in factories, which he expects to cost less than $30,000.

When Tesla opened a factory in Shanghai in 2019, Chinese officials said they expected the electric-vehicle pioneer to have a catfish effect on Chinese industry: introducing a powerful competitor would make Chinese rivals swim faster.

Hu said Tesla's Optimus Prime robot plays a similar role.

The US automaker first launched Optimus in 2021, with CEO Elon Musk saying at the time it could be more important than the car business over time.

Musk's company is taking an artificial intelligence approach for Optimus that mimics its fully self-driving software for electric vehicles.

Chinese competitors and analysts say Tesla is ahead in artificial intelligence, but China has the ability to keep production costs down.

This week, during a conference in Beijing, Tesla showed off Optimus Prime, which looked like a mannequin, standing in a plexiglass box next to a Cybertruck.

Although Optimus Prime was overshadowed by a multitude of Chinese humanoid robots waving, walking and even shrugging, it was still one of the most popular exhibits and was packed with people taking photos.

The sign next to Optimus Prime reads: Next year, more than 1,000 of my compatriots will join the factory.

Tesla reiterated in a statement that it expects to move beyond prototype production and begin small-volume production of the Optimus next year.

Hong Kong-listed UBTECH Robotics has also tested its robots in car factories. The company first tested them in Geely Automobile (0175.HK). It will also test these products in Audi factories in China.

UBTECH project manager Sotirios Stasinopoulos said: Our goal is to achieve mass production by next year.

That means there will be as many as 1,000 robots working in the factory, he said. “This is the first milestone towards large-scale deployment.”

UBTECH uses Nvidia, but more than 90% of the components in its robots come from China.

The current generation of production robots - with large arms capable of welding and other tasks - is dominated by companies outside China, including Japan's Fanuc, Swiss engineering group ABB and Germany's Kuka, owned by Chinese appliance maker Midea Group 000333.SZ.

According to the International Federation of Robotics, China has the most production robots installed in its factories in the world, more than three times as many as North America.

Last November, the country proposed to achieve mass production of humanoid robots by 2025, but the scale would be far smaller than that needed to transition to electric vehicle production.

LeadLeo Institute's Rao said: I think it will take at least 20 to 30 years for humanoid robots to achieve large-scale commercial applications.