Auto parts makers are battling EV to tariff threats. They may have found the next big thing

Mint

12-05-2025

For auto component makers facing risks from the rise of electric vehicles and looming US tariffs, a new potential market is emerging: humanoid robots.
Manufacturers of engine components and transmissions to brake assemblies can diversify into making parts for robots that look and function like humans.
'There are companies which have already started making humanoid robots," said Rohit Nanda, group chief financial Officer at Sona Comstar, which announced its foray into the segment on 30 April. 'About 50% of the bill of materials of such robots are products which we make for other applications like motors, drives, gears,etc."
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The use of robots in scientific research to factories is expected to explode over the next decade. The Indian Space Research Organisation has developed a humanoid robot, Vyommitra, which will fly into space as part of the test launches for the Gaganyaan mission. Goldman Sachs expects theglobalmarket for humanoids to grow to $38 billion by 2035.
China dominates
The supply chain is dominated by Chinese players, who could be challenged, Nanda of Sona Comstar told Mint. 'We need to learn how to make these for a different use case. Our engineers will work with potential customers to develop these capabilities."
The key to the growth of the humanoid robots market is making components cheaper, according to Jacqueline Du, head of China industrial technology research at Goldman Sachs. This is where the Indian auto component makers can help with large-scale production at lower costs.
'Players involved in the auto component manufacturing industry have perfected the cost model for the parts," said Prateek Jain, cofounder and chief operating officer at Addverb Technologies, a robotics company. 'They make many of the products, including gears and motors, which are critical in the production of robots."
Also read | Man versus machine as China shows off humanoid robots in half-marathon
According to Jain, a single humanoid can have 42-50 actuators or a complex system of parts that convert energy into physical motion. 'We need the precision, quality, scale and cost, which can be provided by auto parts players to develop the humanoid robot ecosystem in India."
Sona Comstar estimates that 10 million humanoid robots are expected to be deployed by 2035.
This story will unfold in the next 5-10 years, CFO Nanda said. 'This doesn't come in a big way into revenue in the next 2 to 3 years. Initial investments will be in the engineering team. Once we understand the opportunity, then we can invest in setting up a manufacturing facility."
Mitigating global risks
The bet on making parts for humanoid robots is part of a diversification effort by an industry prone to cyclical slowdowns because of its global exposure. In the year through March 2024, auto component players exported parts worth $21 billion, with nearly a third of it coming from the US. Donald Trump's tariff threat is a big concern for the sector.
'We identify three key risks for auto ancillary players—USMCA/tariffs, EU weakness and Chinese competition, and EVs – given the industry's export reliance on US/EU and good salience of engine components," analysts at Ambit Institutional Equities wrote in a 25 April note.
Targeting robots as a new market is also seen as a prudent bet for auto parts makers because it's still nascent and scale is not expected anytime soon.
Also read | Race to outrun humans: How humanoid robots are closing the gap
The pursuit of leading auto component players to diversify into areas like electronics, robot part manufacturing, aerospace and defence will continue to intensify as these players will look to find new avenues of growth and expand margins, according to Jugnu Sakuja, managing director at consultancy firm Alvarez & Marsal. 'Such moves take time to materialise due to the need for technical capabilities, reliability and testing requirements as well as certifications."
Jefferies analysts Nitij Mangal, Sagar Sahu and Kevin Verghese, in a 9 March note, said that rising electronics manufacturing in the country has opened doors for auto parts players to diversify. 'We believe more firms may expand into electronics, which may potentially lift growth outlook and multiples," they wrote.