Blain’s Morning Porridge, 2nd September 2026 – Robots? What’s the real value?
“No injury to humans. Obedience to humans. Self-preservation.”
Narratives are what drive stock markets. Robots are seen as a massive multi-trillion-dollar Total Addressable Market – with strategic and social implications that will utterly change economies. Musk expects to sell millions every year. The reality is likely to be very different – robotics and society will evolve and probably end up unlike anything we envisage today.
Key Takeaways:
- Robotics may become the most visible part of the AI revolution.
- It is likely to become a huge industrial sector – but it’s unlikely to develop as current expectations predict.
- Industrial Robotics will evolve away from the bi-pedal format – designed for function and maybe modular. Scale industrial robotics will become a strategic resource.
- The market for humanoid bi-pedal robots may become a domestic niche.
- Competition is hotting up – Elon Musk expects to sell millions of Optimus ‘bots, but China is already producing.
- China’s success in capturing swathes of global auto demand highlights the cost vs utility challenge for Western Robotic manufacturers.
The market’s attention is fixed on the disconcerting moves in the bond markets. Bond yields are rising – No Sh*t Sherlock. It doesn’t mean the end of the world as we know it. It means a market responding to the multiple new realities of inflation, trade disruptions, hefty debt loads, frothy valuations, changing geopolitical money flows, and the rest. It’s not a reason to panic – but it could get… interesting. The trick will be to anticipate the consequences of THE GREAT BOND NORMALISATION – which I shall try to highlight over the next few days. The is a substantial risk it might get… messy.
Meanwhile… let’s have some light comic relief… another story from the Boys and Girl’s Big Book of Stock Market Exuberance…
I watch the price of Space-X and Tesla with interest. They each represent different facets of the narrative around narratives. I’ve long argued one problem with equity markets is their fascination with the upside means they underestimate delivery and completion risks because they are so swept up the new, new thing.
The current overarching narrative is AI. The only thing I can guarantee about AI is it won’t be what we expect or predict it to be.
At the company level two Elon Musk narratives stand out:
- Space-X might has become Elon Musk’s front for AI, but if he can deliver space-based datacentres, then it could become an incredibly valuable monopoly (if the datacentre model remains current.) There are multiple risks – from a Kepler Event in Low Earth Orbits, to the engineering. It’s a long-shot – but Musk has delivered before.
- Tesla has gone all-in on robots. Musk says they will represent 80% of Tesla’s future value. He recently told the market he expects to build 10 million Optimus 4 Robots every year. It’s taking time to deliver because to build a robot that can genuinely replace human labour is seriously complex across multiple dimensions. Tesla stock has effectively flatlined – caught between declining margins and sales on cars, but rising hopes for the future.
Let’s focus on the robots. I like robots because I am a lazy person. I am also enjoying the BBC comedy Ann Droid. (Visions of my future perhaps?)
On Bank-Holiday Monday I went to war with the Brambles that have taken over the bottom of my garden over the last few years. I took the loppers and arrayed myself in the armoured panoply of thick gloves and wellies. It was a near-run thing. My arms now look as if I was caught in an accident in a razor factory. The gloves were ripped to shreds. I will need new boots. I got stabbed and pierced by thorns everywhere. It took me hours to cut back the Brambles down to short woody shoots – which I will shortly address with noxious products otherwise banned by the Geneva conventions. A costly victory for mankind over pernicious weeds.
If I buy the puff a robot probably could have done the job in minutes. If it got scratched, then it could have T-Cut and buffed them out. Yet, a robot would have had to understand what is and what isn’t a bramble – a fairly simple binary. It would have had to understood how to cut, dispose of, and then treat the infestation. All doable.
Perhaps Robots are going to be the other side of the AI revolution? Not only will our brains be replaced by AI thinking for us, but our bodies will be replaced by robots doing stuff for us – run by AI. Good or a bad thing…? Big questions for society. (I suspect the best way to prepare for the coming AI domination of everything will be to become a tech billionaire… the rest of us are likely to be useless mouths.)
A few months ago, I queried the market judgement on whether Musk stood any chance of developing a successful robotics business. That negativity was reinforced by the recent footage from the Beijing Robot Olympics – very fast, nimble, robots, even if they did run straight into walls lacking the common sense or ability to slow themselves. The fact is the Chinese are already building and selling basic robots while Musk is still trying to make a commercial model.
Thus far Musk has succeeded in markets where he created his own monopolies. Space X did the impossible – a privately owned firm which rewrote the convention only nations can go to space, and he showed a re-usable rocket was feasible. He effectively re-invented the concept of the electric car and for a brief while Tesla dominated the space… His critical success was to persuade the market how tremendously valuable his monopolies in Space and EVs were and being able to sustain these valuations.
Tesla has never come close to justifying the market’s valuation of its car business in terms of its profitability. Autonomous driving and robotaxis are going to be a highly competitive, thus not very profitable spaces. Robots feels like a “what next”.
Yet Robotics is going to be highly competitive, and the Chinese look likely to dominate global sales. What will that mean for Musk’s expectation that he can sell 10mm robots at $30k each to build a $300 bln market in Robots in just a few years? The economics are enticing. If a robot can do everything a human can do 24/7 and with no need to sleep, eat or drink – then $30k upfront, or $1k per month to lease, might make domestic sense. Even I – a noted Musk sceptic – would probably pay a robot $1k per month to clean, make the beds, do the garden, fix the boat (where recently I had a very nasty experience where the heads literally blew up in my face… don’t ask or try to imagine it!)
However, the bi-pedal robot is a hopeless design for most potential applications. Two feet good evolved as our ancestors came down from the trees and found that walking tall on the savannah enabled them to spot predators. Every function and action of modern life is based around our bi-pedal stance, our homes, our transport and everything mankind has ever constructed, from castles to fighter jets, is designed around how a bi-pedal worker would build it.
So why make bi-pedal robots today? For factory, manufacturing, shipyards, space-engineering, precision construction, surgery applications or whatever, smarter solutions will use macro and micro function-designed robots to build efficiently. I was watching the very likeable TV presenter Ben Fogle’s new series about China – he was interviewing entrepreneur Richard Chang in Shenzhen who blithely explained he expected to replace all his tech workers with precision robotics within a year or so!
I suspect a new way of doing Industrial Robotics will emerge where every aspect of the design and functionality is considered; the servos, the AI, the musculature of actuators and motors, and the power/weight mechanisms. They will become engineering businesses of the future – perhaps Robots coming together in modular units to build what needs to be built. There probably isn’t a role for bi-pedal robots in the factories of the future.
Worth noting that robot construction will become a strategic imperative to swifty construct weapons, munitions and systems – which is why it’s part of the modern defence sector.
Optimus might become little more than a domestic servant – where it will still be a useful thing. It will likely be a multi-billion rather than the trillion-dollar industry the fan boys at Morgan Stanley talk about. But the Chinese are not only ahead of Musk in terms of producing basic robots, they already have the industrial/manufacturing infrastructure in terms the supply chains for the entirely novel and infinitely complex batteries, motors, and electronics robots will require. And they have AI.
I am sure Musk understands that – which is why he says he is building the manufacturing base of supply chains for the Optimus robot. That’s what is delaying him. He understands he can’t assemble them from Chinese parts. And, to compete with China’s unrivalled ability to manufacture at scale to a price, Musk knows he has to replace his expensive workforce force with unpaid robot labour!
I am equally sure Musk knows how complex replicating the human body will be: there are 34 extrinsic and intrinsic muscles that control the function of the human hand. They are all different yet so closely coordinated we can play instruments and make watches. Moreover, future robots will not only have to differentiate between brambles and orchids but coordinate the process of making a bed from washing machine to fluffed pillows while understanding how to make a lasagna. Humans spend lifetimes mastering these simple skills – which is why Robot training and AI integration will be a massive, massive thing. (As long as they can do it in the next 15 years so I can have a robot looking after me in my dotage rather than being sequestered in some miserable retirement home.)
To win the future market and justify Tesla’s valuation, Musk has to build better, cheaper and smarter. He may be hoping his iteration of AI enabled Optimus will be streets ahead of whatever the Chinese produce – but the Chinese car industry suggests that price will be the critical thing.
China is literally eating Europe’s car-makers breakfast, lunch, dinner and supper. Chinese firms now account for 16% of European car sales. I came close to buying a Chinese car (bought a Lexus instead). They are 25% cheaper with longer warranties than European equivalents and are almost as good. They come fully stacked while European makers charge for everything. They are so “good for the price” that deliveries can’t keep up with orders…
Robotics will be the industry of the future – as big as Autos. Who will you bet on? Musk or China? Or both? Interesting times ahead… there always are…
Out of time, and back to the day job…
Bill Blain
Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital
Meanwhile, don’t forget about my new book: The Battle for Hamble
You can read a review on the Society of Professional Economist’s website here.
