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Investing.com -- UBS analysts believe China’s electric vehicle (EV) original equipment manufacturers (OEMs) are well-positioned to dominate the emerging humanoid robotics market, forecasted to reach a total addressable market (TAM) of CNY 1 trillion by 2040.
This potential opportunity could surpass the size of China’s EV market, and analysts expect significant overlap in supply chains and software synergies, especially with advanced driver assistance systems (ADAS).
The report highlights XPeng (NYSE:XPEV), BYD (SZ:002594), and Li Auto (NASDAQ:LI) as the most preferred stocks in China’s EV sector due to their alignment with the rapidly developing humanoid robotics market.
"Given the market’s TAM may become bigger than that of China’s EV market, these OEMs are incentivized to expand into the space," the analysts state.
Tesla’s leadership in humanoid robotics, with a shift toward mass production in the next two years, is expected to catalyze China’s robotics supply chain, much like how Tesla’s push into EVs spurred growth in the domestic EV industry at the start of the decade.
"Tesla (NASDAQ:TSLA)’s current leadership in humanoid robotics may also act as a catalyst for Chinese supply chains, as it relies heavily on China for its component hardware," UBS noted.
The Chinese EV market, having already surpassed 50% penetration, is relatively mature, making the humanoid robotics market a more attractive growth opportunity with lower initial investment requirements.
However, UBS remains cautious about premature valuation rerating, particularly in the AI-linked businesses, as no significant signs of such revaluation have emerged for Chinese EV OEMs.