Excluding Chinese parts could triple Tesla Optimus costs

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Tesla’s ambition to bring the production of its humanoid robot, Optimus, back to the United States faces a massive financial reality check.

According to a recent research note from Morgan Stanley, abandoning the Chinese supply chain could nearly triple the manufacturing costs of the robot, threatening Elon Musk’s goal of making the technology affordable for the masses.

The investment bank estimates that the current bill of materials (BOM) for an Optimus Gen 2 unit stands at approximately $46,000 when leveraging China’s established robotics ecosystem.

However, if Tesla were to shift to a purely “non-China” supply chain, those costs are projected to skyrocket to $131,000 per unit. This spike is driven primarily by the high cost of mechanical “body” parts – such as actuators, motors, and reducers -where China currently holds a dominant 63% global market share.

For Tesla, this cost gap represents a significant roadblock. Elon Musk has repeatedly stated a target price of around $20,000 to $30,000 for the finished robot, aiming to make it cheaper than a small car.

In contrast, Chinese competitors such as Unitree are already leveraging their domestic manufacturing infrastructure to sell robots like the G1 for as little as $16,000.

The divide highlights an emerging “U.S. brain, Chinese body” split in the robotics industry. While American firms like Tesla, NVIDIA, and Google lead in “physical AI” – the software and intelligence required for robots to navigate the real world – the physical hardware remains tethered to Chinese factories.

The dependence is so deep that industry insiders have dubbed the network of Chinese suppliers the “Optimus Chain,” mirroring the massive supplier ecosystem Apple built for the iPhone.

Despite Tesla’s plans to repurpose its Fremont factory for humanoid production, Morgan Stanley warns that escaping this dependence is likely to prove impossible in the short term. With China offering lucrative tax benefits and subsidies for the industry, the cost advantages of “Made in China” remain a critical pillar of Musk’s robotic revolution.

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