Written by Christopher Janati, CFA
Few stories in 2022 get as much attention as anything touching on Elon Musk, Tesla CEO (TSLA) and SpaceX, and the individual with the highest net worth in the world as of this writing. While Twitter news (TWTR) tends to flood coverage lately, we’ve been paying special attention to Tesla’s “Artificial Intelligence Day.”
A humanoid robot under $20,0001
Tesla introduced Optimus to kick off the 2022 event. More importantly, even if a lot of progress is made when measured on an annual basis, this robot is not yet capable of behaving like a normal person or performing fully functional functions.
Within robots, it must be remembered that the things that humans often find easiest — walking, balancing, picking up simple things — are exactly the things that robots find most difficult.
Getting a perfect recall of all the world’s information or processing power to perform almost any reasonable calculation is much easier inside a robotic cockpit and similarly much more difficult for humans.
As with many Tesla products, it will be important to continue to monitor the progress these technologies can make. We might think robots like this can lift heavy things, work in dangerous parts of factories or perform other high-risk jobs, but technological history has many examples of new use cases that emerge once something is deployed at scale. Optimus and other similar products may lead to trends we haven’t even imagined yet.
2021 sees record rise in robotic installations
The International Federation of Robotics has a wide range of information available to anyone seeking to learn more about the different trends in robotics. In Figure 1 we can see2:
- 2021 saw 31% year-over-year growth in industrial robot installations worldwide.
- 2021 was the first year that annual installations of industrial robots exceeded 500,000 units.
- If one looks at the growth trend for the period from 2016 to 2021, there was a clear trend of 11% annual growth. This was by no means a straight line — after 2018’s figure of 423,000 installations, both 2019 and 2020 fell below 400,000. In a sense, the 2021 figure of 517,000 appears to be re-establishing the growth trend.
Figure 1: Industrial robotics facilities expanded greatly from 2011 to 2021
China has a huge robotic workforce
China is at the forefront of many geopolitical debates as we write these words. The 2022 party convention itself is a landmark event, and we’re also dealing with intensifying semiconductor export restrictions from the US, continued “Zero-Covid” lockdowns and even speculation about what may or may not be in store for the “Taiwan Question.”
But the image of Figure 2 looks rather stark. It’s not certain that many people would know or expect before looking at the data that China has the most robotic industrial facilities – Japan or South Korea are often cited. Until now:3
- China had 268,200 industrial robotic facilities in 2021—more than half the total number of 517,000 global facilities mentioned in Figure 1.
- Japan is certainly a major market and was a close second – but the drop from 268,200 to 47,200 is significant.
- China had 97,000 facilities in 2016, while the rest of the world had 207,000. 2021 saw the transformation as China had more installations than the rest of the world after significant growth in the past five years.
- The auto industry has been one of the most exciting growth industries, with in 2020 China had 31,000 facilities and in 2021, 62,000 facilities. We know that electric vehicles and smart cities are a major focus in China, and this clearly could be part of this investment effort.
Figure 2: China is the market leader in industrial robots
Service bots could be the biggest market
Industrial robots are certainly important and should continue to grow, but there is a wide range of possibilities for “service robots”. One can think of service robots as any robot that is not bolted to the factory floor. In 2022, when certain types of jobs are difficult to fill, service bots could be most useful in this context.
Figure 3 shows a concrete example of a robot that is currently being deployed to help clean floors. Floor cleaning isn’t one of the most awesome jobs, and in a tight job market, it’s still a must even if it’s more difficult to find people willing to do it.
Tennant Company (TNCThe T7AMR Robotic Floor Scrubber is sold with an eye to catching a range of current concerns. The sales site notes that the bot helps address:
- Work challenges – We know it’s hard to hire these types of workers in the fourth quarter of 2022.
- safety – It should be noted that the machine can be safely deployed in an environment along with people.
- environment – It should be noted that the machine can use less detergent and less water, possibly attracting more environmentally conscious people.
You might see this device (or something similar) the next time you visit a local supermarket.
Figure 3: Tennant T7AMR Automatic Floor Cleaner
Conclusion: Robots represent the potential opportunities for artificial intelligence and machine learning
We write a lot about AI and machine learning, and we always try to present them not as black box algorithms but as tools that seek to provide real and tangible solutions.
The floor-cleaning robot above is one such example, and notes that it is powered by BrainOS, an artificial intelligence software platform that powers the world’s largest fleet of autonomous mobile robots.
While cleaning the floor may seem simple enough, we have to remember that the robot also navigates, avoids obstacles, adapts to changing environments (think – people moving around) and more.
Even in a challenging economic environment that has seen a difficult performance in stocks, we think it’s an interesting time to reflect on these big trends and companies like BrainOS that are looking to roll out these technologies at scale. The WisdomTree Artificial Intelligence and Innovation Fund (WTAI) on finding companies that offer interesting solutions that use artificial intelligence to help solve some of today’s problems.
Christopher Janati is an employee of WisdomTree UK Limited, a European subsidiary of WisdomTree Asset Management Inc. Parent WisdomTree Investments, Inc.
As of October 26, 2022, WTAI has 0%, 1.66%, 0%, and 0% holdings in Twitter, Tesla, and Tennant Co. and BrainOS. click over here For a complete list of fund holdings. Holdings are subject to change.
1 James Morris, “Tesla AI Day 2022: Musk Demonstrates Optimus Humanoid Robot for Less Than $20,000,” Forbes, 10/1/22.2 Source: “Welcome to the World Robotics 2022 Show,” International Federation of Robotics, 2022.3 Source: “Welcome to the World Robotics 2022 Show,” International Federation of Robotics, 2022.4 Source: Christopher Mims, “Meet the Army of Robots Coming to Fill Scarce Labor,” Wall Street Journal, 10/15/22. 5 source: braincorp.com
Important risks related to this substance
There are risks associated with investing, including the possibility of losing capital. The fund invests in companies operating primarily in the subject of artificial intelligence (AI) investment and innovation. Companies working in the field of AI usually face stiff competition and possibly rapid product obsolescence. These companies also rely heavily on intellectual property rights and may be adversely affected by the loss or impairment of these rights. In addition, AI companies typically invest large amounts of spending on research and development, and there is no guarantee that the products or services produced by these companies will be successful. Companies that take advantage of innovation and technology development may not succeed to replace old technologies or create new markets. The fund invests in the securities included in its index or represented by it regardless of investment merit, and the fund does not try to outperform its index or take defensive positions in declining markets. The indicator configuration is controlled by the index committee, and the indicator may not work as intended. Please read the fund’s prospectus for specific details regarding the fund’s risk profile.
Christopher Janati, Chartered Financial Analyst, Global Head of Research
Christopher Janati started at WisdomTree as a Research Analyst in December 2010, working directly with Jeremy Schwartz, CFA®, Director of Research. In January 2014, he was promoted to Associate Director of Research where he was responsible for leading various groups of analysts and strategists within the broader research team at WisdomTree. In February 2018, Christopher was promoted to Head of Research Europe, who will be based out of the WisdomTree office in London and will be responsible for the full WisdomTree research effort within the European market, as well as supporting the UCITs platform globally. Christopher came to WisdomTree from Lord Abbet, where he worked for four and a half years as a regional advisor. He received an MBA in Quantitative Finance, Accounting, and Economics from New York University’s Stern School of Business in 2010, and a BA in Economics from Colgate University in 2006. Christopher holds the title of Chartered Financial Analyst.
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