Humanoid robots are coming!
Physically, humanoid robots can do more and more, and they are becoming intelligent too. I am not exaggerating: if they take hold, this will be the biggest technological revolution and disruption in human history.
But will companies and people actually be able to afford their work? If they are too expensive, those optimistic visions will come to nothing.
How much will one hour of humanoid labour cost? In this article, you will get the answer.
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This is the fourth instalment in my series on humanoid robots. If I summarise the first three instalments, it sounds like this:
- Humanoid robots can already perform a great many, soon most, and in the long term all physical activities carried out by humans.
- Humanoid robots will get an AI brain. That will make them cognitively intelligent as well. This means they can also think while working and find solutions that they were not directly taught.
- Humanoid robots will learn new skills at enormous speed. The pace of learning is even increasing constantly. We humans have no chance of learning new skills that quickly.
People of course need a good income. But in future, we will increasingly earn that less and less through work in the traditional sense. More on that in a coming article.
Which jobs will humanoid robots perform?
Humanoid robots will therefore become the universal labour machine. What kinds of activities are we actually talking about? For example, work in logistics, meaning the handling and transport of goods. Work on production lines. Gardening and landscaping. Construction site work, hospitality service, patient care, senior care, security staff. Yes, later also in the skilled trades as tilers, electrical installers or plumbers.
How much will a humanoid robot cost?
What do we need to know or estimate for that?
First of all, of course, the manufacturing costs.
At the moment, only a single humanoid robot is being offered for sale. It is the small Alpha 1 Pro from Unitree in China. It costs around EUR 16,000. It still cannot do much. Hardly anything, really. The larger H1 is expected to cost €90,000.
However, this is only an initial small production run. What matters more is how much such a humanoid robot will cost once large quantities can be produced. Here, the experience curve effect, or „Wright’s Law“, helps us. With each cumulative doubling of unit volume, costs fall by a constant factor.
For lithium-ion batteries, costs have fallen by an average of 15–20% since 2012. With each cumulative doubling of production. From 100 to 200 to 400 to 800 to 1600, and so on. For electric cars, also a relatively new product category whose production therefore doubles quickly, manufacturing costs fell by more than 25% with each cumulative doubling of production.
Let us stay with the car analogy, especially an electric car. The manufacturing cost of a small electric car is currently around EUR 30,000. Humanoid robots are smaller, so they need less material. The joints and actuators are, alongside the battery and electronics, the most expensive parts. These are all parts that can be mass-produced and therefore become cheaper as production scales up.
Despite these foreseeable cost reduction effects, let us assume manufacturing costs of USD 30,000 per HR for 2030. Let us assume that manufacturing costs will fall to USD 10,000 per unit by 2040. Let us then add another 1,500 for software provision and the same amount for delivery etc. These costs will also fall per unit. At least for the manufacturers. That gives us total manufacturing costs of 33,000 in 2030, later 22,000 and 11,000 dollars.
How many hours can a humanoid robot work per year?
Humanoid robots do not need holidays, and even if damaged they can be repaired or replaced very quickly. They will not go on strike either. A CNC machine can run for around 90% of the maximum possible time. That would be around 330 days per year. Realistically, we can use the same figure for a humanoid robot.
How many days a week can a humanoid robot work? Clearly, all seven days of the week.
How many hours per day? In theory, 24 hours. But let us assume that an HR also needs to be serviced or recalibrated daily, so we can subtract one hour. And let us assume that not every HR can be charged inductively through the floor it stands on. Its battery needs to be swapped or it needs to charge for one hour. So we subtract one hour for charging as well. If we now subtract another two hours from the remaining 22 hours just to be safe, we arrive at 20 working hours per day. So this too is a rather pessimistic assumption.
330 days times 20 hours is 6,600 working hours per year.
How fast do humanoid robots work?
At the moment, humanoid robots move more slowly than humans in every respect. But their working speed will continue to increase. Modern industrial robots already achieve two and a half times the working speed of humans today.
So it is rather cautious, and once again pessimistic, if we assume that in 2030 a humanoid robot will work at a speed equivalent to a human. In other words, 100%. In the long term, it will be more like 200% and more.
What is the operating life in years?
A car is used for about 20 years. A lathe or milling machine, and also a CNC machining centre, can be used for around 10–15 years. At least. Let us stay cautious and simply assume only eight years for the humanoid robot, partly because of the very rapid technological progress at the beginning. After that, it is scrap and gets recycled. That too is a rather pessimistic assumption.
How high are the capital costs?
The annual capital cost is USD 4,124. That is purchase price divided by operating life. I estimate the pure purchase prices for skills, meaning new HR capabilities, at USD 1,500 per year. Although manufacturers will likely charge even more for capabilities. We will look at that later.
How high are the energy costs?
During very hard physical work, a human consumes 500 to 800 kilocalories per hour. During light physical work, 100 to 300 kilocalories. Let us take the fairly high figure of 600 kilocalories per hour as an average. One kilocalorie is equivalent to 1.162 watt-hours. So that is around 0.7 kWh per hour of hard physical work by a human.
Humans are astonishingly energy-efficient. So for hard work by a humanoid robot, let us assume three times that figure. That is around 2 kWh of energy per hour of work. That would be 40 kWh per day. As I said, that is a very high value. Most tasks performed by a humanoid robot will require significantly less energy. And now let us assume a rather high industrial electricity tariff of USD 0.20 per kWh. That gives us energy costs of USD 8 per day or USD 2,640 per year.
How high are the maintenance and repair costs?
For this, we can simply assume that maintenance and repair cost enough that over the eight-year usage period, you have to pay the humanoid robot’s manufacturing costs all over again. In other words, €4,125 per year.
How high are the costs for people who operate humanoid robots?
Robots will not be able to work entirely without humans. People will have to intervene again and again, if only to deploy humanoid robots in the right place with the right function. That takes human time and therefore costs money.
However, it will not be much time for each individual robot. Let us assume half an hour per day per humanoid robot and value it at €100 per hour, so effectively €50 per half hour and therefore €18,000 per year. Is it not interesting that the biggest cost driver in operating the robot is the remaining human labour?
So overall we have annual operating costs of USD 30,390 and USD 4.60 per hour. At first. Later, less and less.
Humanoid robots: how much will you really have to pay the manufacturer?
We assume that manufacturers of humanoid robots will not sell them. They will use the Robot-as-a-Service business model. In other words, they will rent them out, or more precisely lease them. Anyone who wants to use a humanoid robot will – we assume – have to pay an amount per working hour.
Why? Because such a model has many advantages. The customer pays only for the performance they actually receive. The manufacturer can rule out robots being used for illegal purposes. Above all, however, the manufacturer can earn many times more per robot with RaaS than by simply selling the robots.
As we will see later, a single humanoid robot saves a huge amount per hour and per year. The robot manufacturers will want a large share of that. They will certainly not just add a normal profit margin onto their costs. They will charge what customers are willing to pay.
If a product saves you €30 per hour, you are willing to pay not just €5 per hour, but more like €10 or even more.
We assume that manufacturers will charge three times their manufacturing costs. For that, we apply a multiplier of 200%. This includes software updates and upgrades.
So on top of 4.60, another €9.21 is added, meaning that initially the working hour costs €13.81 and later €10.86.
Mind you: so far, at every point in this rough calculation we have used quite high values and still arrive at rather low costs.
How high are the costs of human labour per hour?
A skilled worker in Germany earns a gross wage of under USD 20 per hour. I consider that too little. We would need to become more productive in order to be able to pay more. But that is another topic. At full-time work per year, including payments for holidays, public holidays and sick leave, that would amount to around USD 45,500. With thirteen salaries per year, it is around USD 50,000. In the US, wages are significantly higher. So let us assume €60,000 gross per year to be on the safe side.
For social costs in Germany, meaning pension contributions and insurance for illness, unemployment and accidents, occupational health support, etc., let us assume 20%, or €12,000 per year. For the US, this figure is too high; for Germany, rather too low. Employees also first have to be found and recruited. That creates recruitment costs for each employee. The effort required to acquire a robot, which can also be used for all kinds of tasks, is much lower. In addition, employees have to be supervised, led, managed and administered.
Employees need staff rooms, parking spaces and so on. And above all, employees must be onboarded and trained for every job. A humanoid robot simply gets a new skill or capability uploaded, and that is it.
Let us assume only 20% additional costs for all of that, which is actually very little. That brings us, with a gross salary of €60,000, to total costs of EUR 84,000.
If we now take the average annual working hours in Germany and the US, we arrive at 1,975 hours per employee per year. That means labour costs of EUR 42.53 per working hour.
What does a humanoid robot’s labour cost per hour?
Per working hour, the costs for a humanoid robot are therefore around 68 to 74 percent lower. €28.72 lower at first, and later up to €31.67 lower. Multiplied by the number of working hours of a humanoid robot, this results in total savings per robot of initially €190,000 and later €209,000 per year! Even under very cautious assumptions.
Humanoid robots will cost only around 25 to 30% as much per working hour as a human. If we double the HR’s working speed, they will cost only 13 to 16% of a human employee per hour. Companies will have no choice but to use humanoid robots in competitive markets.
And now what?
In the first three articles on humanoid robots, we concluded that their physical capabilities will very quickly reach those of humans and then surpass them. That their cognitive capabilities will also be very great through the integration of AI. And that the capabilities of humanoids will also grow very quickly because they can learn new skills in astonishingly simple and fast ways. Namely through observation, watching videos or even self-learning.
Now we can also say this: they will also be far cheaper than human employees.
That will massively change the world of life and work.
Humanoid robots will enter our working and living world faster than most people today can imagine.
We have 1.5 billion cars on Earth. In the not-too-distant future, in 20 or 30 years, we will see a similar number of humanoid robots working for us. We will have to, and be allowed to, rethink work and income from the ground up. We humans will reinvent our understanding of being and the meaning of life.
In the three earlier instalments, I recommended that you include humanoid robots in your strategic analyses and considerations. You will have to reinvent your job and your company sooner than your intuition assumes.
Not to forget: humanoid robots and all the services around them will be one of the biggest, if not the biggest, growth markets of the future. Please examine how your company can participate in and contribute to it.
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Here you will find the other articles on AI and robotics:
– Humanoid robots: The solution to the labour shortage? (Part 1)
– Humanoid robots: How intelligent will they be? (Part 2)
– Humanoid robots: How will they learn? (Part 3)
– AI kills all jobs – what then? Three scenarios (Part 1)
– Prosperity through AI, but how? (Part 2)
– AI and robotics: Income without work – this is how we finance it! (Part 3)
– Securing income in the AI economy. 13 recommendations (Part 4)
I wish you a brilliant future: Have a bright future!