China ahead of Tesla? Planning mass production of humanoid robots in 2026, Beijing is fully promoting the "Embodied AI" strategy

Despite Tesla CEO Elon Musk’s high-profile claims that its humanoid robot “Optimus” will be a key driver of future market capitalization reaching trillions of dollars, in reality, the first to mass produce humanoid robots may not be the United States, but China. As the Beijing government lists “Embodied Artificial Intelligence” (Embodied AI) as the next technological focus, China’s humanoid robot industry is rapidly expanding, with large-scale commercialization expected by 2026.

Tesla Not Yet Selling, Chinese Companies Accelerate Mass Production

Although Musk frequently discusses Tesla’s future market value potentially surpassing tens of trillions of dollars, a key component is its humanoid robot Optimus, which has yet to be officially sold to the public. Meanwhile, several Chinese companies plan to begin mass production of humanoid robots in 2026, leading the commercialization phase.

According to Andreas Brauchle, a partner at consulting firm Horváth, “China is ahead of the US in early commercialization of humanoid robots.” While both countries may eventually develop similarly large markets, China’s current expansion speed is noticeably faster.

“Embodied AI” Included in Five-Year Plan, China Fully Supports Policy

The Chinese government has incorporated humanoid robots into the “Embodied Artificial Intelligence” development strategy, and at the October 2025 Central Conference, this field was included in the 15th Five-Year Plan. This indicates that resources from central to local governments will be invested in building supply chains and large-scale production systems.

Karel Eloot, senior partner at McKinsey, pointed out that China’s active promotion of humanoid robots aims to address labor shortages, stimulate new economic growth, and strengthen its competitiveness in the global tech arena.

Accelerating Automation to Address Aging Population and Labor Costs

Faced with declining birth rates and an aging population, China urgently needs alternative labor forces. Humanoid robots are seen as one solution, with potential applications ranging from factory production lines to service industries and home care.

UBTech Robotics’ Walker S2 robot even has the ability to autonomously replace batteries, enabling 24/7 operation. Additionally, Chinese companies are actively developing more human-like functions, such as Unitree’s robots capable of dancing, and Xpeng’s “Iron” series is undergoing second-generation development.

Industry Competition Heats Up: Chinese Companies Accelerate Technology and Capital Markets

Currently, China has over 150 humanoid robot companies, with several leading firms expanding rapidly:

Unitree Robotics: Planning to go public, with an estimated valuation of over $7 billion. Its H2 robot can dance.

UBTech Robotics: Listed in Hong Kong, raised about $400 million in November, plans to produce 5,000 units by 2026, and 10,000 units by 2027.

AgiBot: Announced this month that it has completed production of its 5,000th robot.

Xpeng (Xpeng Motors): Launched the second-generation humanoid robot Iron, expected to enter mass production next year.

Different Strengths in US and China: China Excels in Mass Production, US Focuses on AI R&D

China’s advantages in manufacturing and supply chain integration give it a lead in reducing robot costs. Ethan Qi from Counterpoint Research noted that China’s deep supply chain makes companies more cost-competitive, with UBTech expecting annual production costs to decrease by 20% to 30%.

However, the US leads in AI and autonomous control technology, focusing on vertical integration—controlling core components (like actuators) and AI software—creating safer, higher-performance products and protecting intellectual property.

Long-Term Market Scale: China Starts First, US and China Ultimately Share Market

RBC Capital Markets estimates that the global humanoid robot market will reach $9 trillion by 2050, with China accounting for 60%. However, Brauchle predicts that after 2040, the consumer market penetration rates in China and the US will converge, mainly driven by large-scale adoption in households.

Technical and Cost Barriers Still Need Breakthroughs

Despite rapid progress in China, the industry still faces several bottlenecks, including:

Chip Dependency: Heavy reliance on US chips (like Nvidia), which could impact progress if restrictions are imposed.

Technical Challenges: The dexterity of robot hands remains difficult to mimic human fine movements, limiting application scope.

AI Stability: AI decision-making capabilities are still limited in unpredictable environments.

High Costs: Currently, high-end prototypes cost between $150,000 and $500,000 per unit; costs need to be reduced to $20,000–$50,000 to compete with human labor.

Backlash Against Investment Boom: Chinese Authorities Worry About “Robot Bubble”

Although humanoid robots are regarded as strategic technology, Chinese officials are also concerned about an overheated capital market. The National Development and Reform Commission (NDRC) warned in November that the robot market might be experiencing an investment bubble, citing product homogeneity and explosive growth in the number of companies.

Brauchle from Horváth pointed out that many product demo videos and exhibition performances are overly “packaged,” with a significant gap between these and actual commercial viability. This could lead investors to overestimate progress, ultimately causing market corrections and stagnation in innovation.

This article “China Races Ahead of Tesla? Planning to Mass Produce Humanoid Robots in 2026, Beijing Fully Promotes ‘Embodied AI’ Strategy” first appeared on Lian News ABMedia.