The Physical AI Revolution: Is Canada Missing the Boat?

As the global technology landscape shifts decisively toward "physical AI"—the integration of artificial intelligence with robotics and sensory systems—experts are sounding the alarm regarding Canada’s readiness to compete. While the world embraces a new generation of adaptable, intelligent machines, Canada appears to be faltering in adoption, risking its position in the global productivity race and ceding leadership to aggressive competitors like China and South Korea.

The stakes are high. As artificial intelligence moves beyond screens and into the physical world, the ability to deploy intelligent robots is becoming a key determinant of national economic competitiveness. Despite possessing world-class talent and innovative domestic startups, Canada faces a deepening "adoption gap" driven by regulatory hurdles, a cautious business culture, and the absence of a cohesive national strategy.

The Global Surge: China and the Robotics Boom

The contrast between Canada’s trajectory and that of global leaders is stark. China, in particular, has emerged as the undisputed heavyweight in the sector. According to data from the International Federation of Robotics (IFR), China accounted for over half of all industrial robots installed worldwide in 2024, deploying approximately 295,000 units. This surge is not merely a result of consumption; China is rapidly transitioning from an importer of robotics technology to a dominant manufacturer and exporter, aggressively seeking markets beyond its borders.

Susanne Bieller, General Secretary of the IFR, notes that China’s acceleration is strategic and two-fold: speeding up domestic manufacturing to satisfy internal demand while simultaneously positioning itself to supply the rest of the world.

In comparison, Canada’s standing has slipped. In 2024, Canada ranked 13th globally in operational stock of industrial robots, trailing not only traditional powerhouses like South Korea, China, and the United States, but also falling behind European nations such as Spain and France.

Table 1: The Global Robotics Landscape (2024-2030 Projections)

Metric	Global Market / Leader Stats	Canada's Position
2024 Operational Stock Rank	Leaders: South Korea, China, USA	13th (Behind Spain, India, France)
Key Installation Stat (2024)	China: ~295,000 units (50%+ of global total)	Comparison data not specified, but noted as "lagging"
Market Valuation (2025)	~$50 Billion USD (+11% YoY)	N/A
Projected Market (2030)	~$111 Billion USD	Risk of minimal participation
National Strategy Status	Standalone strategies in China, Germany, Japan	No standalone robotics strategy

The economic implications of this divergence are profound. With the global robotics market valued at nearly $50 billion USD in 2025 and projected to more than double to $111 billion USD by 2030, failing to capture a significant share of this growth could have lasting impacts on Canada’s GDP and industrial productivity.

The Shift to "Physical AI": A Technological Inflection Point

The urgency of the situation is compounded by a fundamental technological shift. The industry is moving away from traditional, top-down programming—where robots are coded to perform specific, repetitive steps in controlled environments—toward a bottom-up, generative AI approach.

This new paradigm, often termed "Physical AI," allows machines to learn tasks through observation and simulation rather than explicit coding. This evolution was a centerpiece at the recent Consumer Electronics Show (CES), highlighted by partnerships such as the one between Google and Boston Dynamics to deploy AI-powered Atlas robots in Hyundai factories.

Hallie Siegel, CEO of the Canadian Robotics Council, explains that this shift lowers the barrier to entry for smaller companies. "When there's sufficient intelligence baked into that process, the robot itself can learn how to complete a task. It doesn't need to be coded," Siegel said. This "plug-and-play" capability theoretically makes robotics accessible to a wider range of industries beyond automotive manufacturing.

However, despite these advancements making adoption easier, Canadian businesses outside the auto sector remain hesitant. Experts cite a lack of understanding regarding Return on Investment (ROI) and a general unfamiliarity with the technology as primary barriers.

The Canadian Paradox: Innovating for Export

Perhaps the most frustrating aspect of Canada’s current position is that the country is not lacking in innovation. Canada ranks fifth globally in the number of service-robotics companies per capita. Yet, these domestic innovators are frequently forced to look abroad to survive and grow.

Key Canadian Innovators Facing Domestic Barriers:

• Avidbots: Based in Kitchener, Ontario, this company manufactures autonomous floor-cleaning robots. Despite designing and assembling their machines in Canada, co-founder Pablo Molina estimates that only about 15% of their deployments are domestic. The vast majority of their market lies internationally.
• Waabi: A Toronto-based autonomous trucking company led by University of Toronto professor Raquel Urtasun. Waabi has created a "metaverse for self-driving" to train its AI in realistic virtual environments. However, while Waabi’s trucks operate on public roads in Texas, regulatory restrictions prevent similar deployments in Canada.

This dynamic creates a perverse economic outcome: Canada effectively exports its productivity gains. By selling their efficiency-boosting technologies primarily to foreign markets, Canadian robotics companies are helping international competitors become more productive while domestic industries stagnate. "Every time they do that, they're widening the productivity gap here in Canada," Siegel warned.

Regulatory and Strategic Headwinds

Two major factors impede the domestic adoption of physical AI: a restrictive regulatory environment and the lack of a targeted national strategy.

Regulatory Stagnation
Raquel Urtasun points to Canada’s regulatory framework as a significant bottleneck. While the United States has adopted an open approach to testing and deploying technologies like autonomous vehicles, Canada remains risk-averse. "Innovation has to be deployed much faster than what we see in Canada," Urtasun stated, emphasizing that the U.S. enables innovation in a responsible manner, whereas Canada’s caution stifles it.

The Strategy Gap
While nations like China, South Korea, Germany, and Japan have implemented standalone national robotics strategies—complete with funding, training incentives, and specific adoption targets—Canada has opted to fold robotics into its broader AI strategy.

Table 2: Policy Approaches to Robotics

Region	Strategy Type	Key Components
China / S. Korea / Japan	Standalone National Robotics Strategy	Specific funding, training incentives, adoption targets
United States	Innovation-First Regulatory Framework	Open deployment (e.g., autonomous vehicles), private sector leadership
Canada	Integrated AI Strategy (No Standalone)	Focus on broader AI software; lack of specific "physical" hardware focus

Innovation, Science and Economic Development Canada has confirmed that the government is "not pursuing a standalone national robotics strategy" at this time. Instead, officials maintain that the ongoing work on the Pan-Canadian Artificial Intelligence Strategy will cover physical AI systems and automation.

Critics argue that this software-centric view misses the unique challenges of the physical world. "If we keep over-emphasizing just the software piece, we're not really going to get the transformational aspects of what these technologies promise us," Siegel noted.

Conclusion: A Call for "All-In" Commitment

The consensus among industry leaders is that Canada is at a critical juncture. The convergence of generative AI and robotics offers a pathway to solve Canada’s chronic productivity issues, but only if the technology is embraced domestically.

For Canada to transition from a supplier of talent and raw innovation to a leader in adoption and industrial productivity, a shift in mindset is required. This involves modernizing regulatory frameworks to allow for real-world testing, incentivizing businesses to invest in automation, and recognizing that physical AI requires distinct strategic support separate from pure software.

As Raquel Urtasun summarized, this is "a key moment where Canada has to be all-in." Without urgent action to close the adoption gap, Canada risks watching the physical AI revolution from the sidelines, while the rest of the world races ahead.