Business

Automakers are spending huge sums to bring a slew of new electric vehicles to market over the next few years while Tesla has a big head start.
But Americans are still hesitant to buy in, and largely because of concerns around charging.
There’s a groundswell forming to expand and improve the U.S. charging landscape, but experts agree there’s a long road ahead.

A charging port is seen on a Mercedes Benz EQC 400 4Matic electric vehicle at the Canadian International AutoShow in Toronto, Ontario, Canada, February 13, 2019.
Mark Blinch | Reuters

There’s a looming problem with the auto industry’s grand EV plans.
Automakers are spending huge sums to bring a slew of new electric vehicles to market over the next few years. Ford Motor alone expects to spend more than $50 billion through 2026 to ramp up EV production around the world. General Motors said it will spend $35 billion through 2025, and Volkswagen said it expects to spend almost $200 billion on EVs and related software through 2028.

But Americans are still hesitant to buy in, and largely because of concerns around charging.
Survey after survey has shown that worries about charging — specifically, public charging — is holding buyers back from electric vehicles.
A June study by Cox Automotive found that 32% of consumers who were considering an EV cited a “lack of charging stations in my area” as a barrier to purchase. A Consumer Reports study in April found that “charging logistics” and “purchase price” were the two biggest factors holding consumers back. And an April poll by the Energy Policy Institute at the University of Chicago and the Associated Press-NORC Center for Public Affairs Research found that 47% of U.S. adults said it’s not likely they would buy an EV as their next car, with nearly 80% saying that a lack of charging stations was a factor.
Despite the United Auto Workers’ concerns about Detroit’s transition to EVs, and the union’s ongoing strike, there’s a groundswell forming to expand and improve the U.S. charging landscape. President Joe Biden has pushed the issue, working with Congress to deliver major incentives to improve public charging, and rival automakers have struck rare partnerships to help establish a single charging standard and reduce pain points for EV drivers.
But the question remains, how long — and how severely — will charging hamper the EV revolution, right as its finally picking up steam?

How and where do I charge my EV?

Public charging stations aren’t quite like gas stations, in the sense that many EV owners only use them occasionally. Most EV owners do most of their charging at home, with a Level 2 home charger provided by the automaker or a third party.
That won’t work for everyone, of course. And even EV owners who charge at home use public chargers on occasion.
Some EV motorists charge at work. Workplaces that have employee parking often have chargers available, as do a growing number of hotels, shopping centers and other places where people might park an EV for a few hours.
Often called “destination chargers,” these charge at rates similar to what you’d get with home chargers, adding around 35 miles of range per hour. You may need an app from a charging company to use them, but the process is mostly painless — assuming the chargers are working.
Destination chargers can be a great way to add some range if you’re planning to be parked for a while. But on a road trip, you’ll want a fast charger.

A guide to charging your EV at home

The vast majority of EV owners — about 83%, according to a JD Power study in March — do most of their charging at home. Home chargers that can fully charge your EV overnight aren’t expensive, and they aren’t hard to set up. Here’s what you need to know.
First, know your chargers: Most EV makers, and several third-party manufacturers, offer so-called “Level 2” chargers that plug into 240-volt outlets. A Level 1 charger plugs into a regular 110-volt household outlet and is really only applicable for emergencies.
Next, know your needs: A portable Level 2 charger, which you can install yourself, provides about 20 miles of range per hour and can work well for overnight charging at home. A dedicated 240-volt Level 2 home charging station, installed by an electrician in your garage or other covered area, will give you around 35 miles of range per hour.
Third, know your price point: A portable Level 2 charger will run you anywhere from $300 to $700, while a professionally installed 240-volt Level 2 could cost upwards of $1,000.

Modern fast chargers deliver much more power to your car’s battery than the chargers that most EV drivers use at home or work, enough to charge your car to 80% in roughly half an hour, more or less.
While the cost of fast-charging varies with time of day and location, it’s usually cheaper than a tank of gas.
And though Tesla drivers have it relatively easy, finding a charger that works with other EVs away from home — and specifically, finding one that is working — can be a frustrating experience.

Why do Teslas have it so much easier?

According to the U.S. Department of Energy, almost 21,000 of the roughly 33,000 public fast chargers currently up and running in the U.S. are Tesla Superchargers. Those chargers, like Tesla’s own destination chargers, use a unique plug design called NACS, short for North American Charging Standard.
Tesla originally built its Supercharging network to overcome potential buyers’ concerns about charging on road trips, back when there were few fast chargers available in the country.
The network’s extent and reliability became a key part of Tesla’s early sales pitch to customers hesitant to take the leap to a fully electric EV, and it has continued to play an important role in its success.

A view of Tesla Superchargers on February 15, 2023 in San Rafael, California.
Justin Sullivan | Getty Images

The charging option for most everyone else — called the Combined Charging System, or CCS — is harder to come by and often unreliable.
The shortcomings of CCS have been a growing concern for global automakers — and the Detroit companies in particular — as they spend billions on new EVs. Simply put, America’s patchwork of CCS chargers offers spotty coverage, hard-to-use devices, and, too often, chargers that are broken.
CCS charging operators like ChargePoint and EVgo have recently begun taking major steps to improve the “up time” of their chargers, or the percentage of time the charger is available for use.
But the reliability issue remains a big one. In a study last year, researchers at the University of California at Berkeley checked 675 CCS fast chargers in the Bay Area and found that almost a quarter of them weren’t functional. More recently, an August 2023 study by JD Power found that customer satisfaction with public CCS chargers — both destination chargers and fast chargers — has fallen sharply over the last few years, with reliability ranking as a key issue.
“The reliability of public chargers continues to be a problem,” said Brent Gruber, who leads JD Power’s EV practice. “The situation is stuck at a level where one of every five visits ends without charging, the majority of which are due to station outages.”
Notably, that JD Power study also found customer satisfaction with Tesla’s proprietary fast-charging network to be much higher than the CCS alternatives.
Not to mention, there are fewer than 12,000 CCS fast chargers across the U.S. today.

What about a single charging standard?

Tesla has begun bringing its rivals into the fold.
The EV leader and Ford surprised the automotive world in May when they announced they had struck a deal to give Ford EV owners access to more than 12,000 Tesla superchargers in the U.S. and Canada starting in early 2024.
Ford also said that it will make the NACS charging port standard on its EVs starting in 2025. (Owners of older Ford EVs will be able to use the Tesla chargers with an adapter.)
It might seem strange for one of the world’s oldest automakers to partner with the EV maker Tesla instead of building its own charging network. But as Ford finance chief John Lawler explained at a June conference that the tie-up makes sense for Ford and its customers.
“We’re going to build things where we think we can be differentiated,” Lawler said. “We’re going to partner where it’s really good for our customers and where we can scale quickly. Opening up the Tesla charging network to our customers, that’s about them and it scales very quickly for them. Their options are much greater.”
A flurry of similar deals between Tesla and other EV makers, including GM, Volvo Cars, Polestar and Rivian, were announced in the weeks that followed.
“We’re deeply honored that Ford, GM, Mercedes and many other [automakers] have signed up to use our connector and gain access to our charging network,” Tesla CEO Elon Musk said during the company’s most recent earnings call. “We strongly believe in helping other car companies to accelerate the EV revolution and just trying to do the right thing in general.” 

The broad uptake of Tesla’s charging tech is generally good news.
The company’s network consistently scores well for reliability. Its NACS plugs are also considerably smaller and lighter than CCS fast-charging plugs, which can be cumbersome for older or disabled drivers to use.
What’s more, Tesla’s chargers all work the same way, whereas CCS chargers from rival companies may have very different procedures. And, unlike most CCS fast chargers, Tesla’s billing is simple and seamless: Owners simply plug in, charge up and drive away, with no special apps or credit cards required.
While it’s not yet clear how the process will work for drivers of other EVs, it’s expected to be similarly painless once the driver (or the car) is signed up with Tesla.
Meanwhile, progress is being made on formalizing the NACS plug design as an industry standard. SAE International, which sets key engineering standards for the auto industry, said on June 27 that it’s working on official performance and safety standards for NACS charging plugs and that it expects to issue them within six months.
Charging networks and charger manufacturers are also responding. EVgo said in June that it will start deploying NACS connectors on the high-speed chargers in its U.S. network later this year. ABB, a Swiss maker of industrial equipment including commercial EV chargers, said on June 9 that it will offer NACS plugs as an option on its chargers as soon as testing and validation of the new connector is complete, likely in a few months.
And ChargePoint, which installs and manages chargers for other businesses, said its clients can now order new chargers with NACS connectors and that it can retrofit its existing chargers with the Tesla-designed connectors as well.

Long road ahead

Tesla’s decision to open its network to other automakers — and the companies’ willingness to accept the invitation — will give drivers of non-Tesla EVs a lot more options for charging on the go.
But most experts agree that the U.S. will need many more fast charging stations as the EV transition continues to unfold.
A provision in the Bipartisan Infrastructure Law, passed in 2021, provides $5 billion in subsidies to states for EV charging stations and related infrastructure between 2022 and 2026. The stated goal is to accelerate the installation of 500,000 new EV chargers across the U.S. by 2030, with at least one station every 50 miles along major highways.
The states in turn have been handing that funding out to companies that are building charging stations — with a few catches:

Companies are to build chargers that are convenient, affordable and accessible to the broadest number of people.
The states must ensure that some charging stations are built in less dense areas, like rural regions and tribal lands.
Charging companies must provide customers with real-time updates as to whether the station is occupied or out of service.
There must be at least four 150-kilowatt CCS fast-charging ports per station.
Charging operators can’t require drivers to sign up for memberships to access chargers.
Chargers must have ports that can be used by “the broadest number of vehicle owners.” Specifically, proprietary charging stations that can only be accessed by one company’s vehicles will not qualify for funding.

That last provision goes a long way to explaining why Tesla decided to open up its charging network to other automakers in a big step forward for EVs of all kinds.
And while the UAW is currently concerned about the industry’s plans to transition to EVs — not least because EVs have fewer parts and require fewer workers to build than do internal-combustion vehicles —it’s likely that those concerns will be addressed. It’s a safe bet that EV adoption will accelerate over the next few years as dozens of new EV models hit U.S. dealerships.
But while many more EVs are on the way, the charging infrastructure buildout is still in its early stages. It will be several more years until fast chargers are available and convenient everywhere in the country. More

Stellantis’ latest offer to the United Auto Workers could lead to the closure of 18 facilities but also repurpose an idled vehicle assembly plant in Illinois, sources told CNBC.
The proposal was made before the start of targeted UAW strikes against Stellantis, Ford and GM.
The plans would likely affect thousands of UAW members, shrink the automaker’s North American footprint and create a new “modernized” parts and distribution network, sources said.

United Auto Workers members attend a solidarity rally as the UAW strikes the Big Three automakers on September 15, 2023 in Detroit, Michigan.
Bill Pugliano | Getty Images

DETROIT — The most recent contract proposal by automaker Stellantis to the United Auto Workers union could lead to the closure of 18 U.S. facilities, but it could also bring new investments and repurpose an idled vehicle assembly plant in Illinois, sources familiar with the discussions told CNBC.
The plans would likely affect thousands of UAW members, shrink the automaker’s North American footprint and create a new “modernized” parts and distribution network, which company and union leaders were at odds over, the sources said.

A focal point of the plan is possible closures of 10 “Mopar” parts and distribution centers, which are scattered across the country, to consolidate them into larger Amazon-like distribution centers, said the sources, who spoke on the condition of anonymity because the talks are private and ongoing. The proposal included a potential “Mega Hub” at Belvidere Assembly, which the automaker indefinitely idled in February.

Three sources said other manufacturing facilities included in the proposal are Tipton Transmission Plant in Indiana; the partially decommissioned Trenton Engine Complex; the already idled Mount Elliott Tool & Die in Michigan; and the idled Belvidere Assembly. Also included were a Detroit warehouse, office space and the automaker’s North American headquarters and technology center, a massive 500-acre campus in metro Detroit formerly used as Chrysler’s world headquarters.
The last piece of the offer involving its North American headquarters comes as companies adjust to remote or hybrid work, and attempt to realign their physical footprints following the coronavirus pandemic.

The sign is seen outside of the FCA US LLC Headquarters and Technology Center as it is changed to Stellantis on January 19, 2021 in Auburn Hills, Michigan.
Jeff Kowalsky | Afp | Getty Images

In 2021, Stellantis said it wanted to have a majority of its salaried employees work remotely most of the time, including the then-17,000 employees in North America. Following those plans, the company confirmed it was “evaluating how we work to enable our teams to be their most innovative, creative and efficient. That analysis includes potential adjustments to our real estate portfolio.” Stellantis said the facility would “continue to be our North American headquarters and North America technical center.”
It’s not guaranteed the facilities would close under a labor deal; however, Stellantis is required to include potential closures or sales of any location where a UAW member works, a company source said. The Detroit Free Press reported in 2022 that the company could lease a portion of the headquarters complex.

The 18 potential closures were part of a Thursday night proposal by Stellantis to the union, which began to launch targeted strikes against the Detroit automakers after contracts expired later at 11:59 p.m. Negotiations between Stellantis and the UAW reconvened Monday morning.
Stellantis also included its proving grounds in Arizona in the proposal, but said operations would continue with any sale, two of the sources said.
Stellantis described Monday’s talks with UAW leaders as “constructive and focused on where we can find common ground.”
“We continue to listen to the UAW to identify where we can work together and will continue to bargain in good faith until an agreement is reached. We look forward to getting everyone back to work as soon as possible,” the company said.

Belvidere Assembly

The Belvidere, Illinois, plant is one of the largest points of contention between the automaker and union, which is now on the fourth day of targeted strikes at three major assembly plants. The union is striking one plant each at Stellantis, General Motors and Ford Motor, but has threatened additional work stoppages will occur, depending how negotiations go.
Reopening the Illinois plant would be a major win for UAW leaders, but they have concerns about employment, uprooting workers and families, along with pay and automation, according to two of the sources.
Specifically, they worry new facilities may not employ as many union members as the assembly plant and current parts and distribution centers, they said. Mopar jobs also pay less than positions at traditional assembly facilities such as Belvidere, which was producing Jeep Cherokee SUVs until its idling in February.
Two sources said the parts proposal for Belvidere has been one of several discussions regarding the plant, and the offer could change, based on the talks. Discussions have also taken place about using part of Belvidere — a nearly 5 million-square-foot facility — for electric vehicle battery components, they said.

Stellantis North American Chief Operating Officer Mark Stewart, who is overseeing the UAW talks, said the company needs to “modernize” the Mopar facilities. Without disclosing exact details, he said those plans would not impact employment.
“We need to make investments into Mopar,” Stewart said during a media roundtable Saturday. “In a lot of cases, it … doesn’t make sense to make those investments in the location that they’re in.”
Stewart, without disclosing details of the plan, described the company’s proposal for Belvidere as a “very compelling offer.” However, he said it was contingent upon the union agreeing to a tentative deal before a strike.
“So we will have to revisit all of those items, but very compelling solution for that, which was rejected,” he said Saturday.
Stellantis’ most recent proposal to the UAW included raises of nearly 21% over the course of the contract, including an immediate 10% pay increase, and would end wage tiers for some workers in addition to other bonuses and benefits. Benefits in the proposal are in line with other offers from GM and Ford.

UAW Vice President Rich Boyer addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.
Michael Wayland / CNBC

UAW Vice President Rich Boyer has stressed that the Belvidere plant is a make-or-break issue. He even encouraged a crowd Friday during a rally with U.S. Sen. Bernie Sanders, I-Vt., to chant “bull—-” at the offers of the Detroit automakers.
“I want the world to hear this: This is about the working class. This is about the haves and have-nots, and we’re tired of not having anything,” Boyer, who leads Stellantis negotiations, said during the rally.

Mopar

The company’s current proposal would establish new Mopar facilities in Fishkill, New York, and Macon, Georgia, and move work from several facilities in Michigan to its Trenton North plant, located southwest of Detroit, according to two sources.
The Mopar facilities that could close include Atlanta PDC; Boston PDC; Centerline Warehouse & Packaging; Chicago PDC; Marysville PDC; Milwaukee PDC; New York PDC; Orlando PDC; Sherwood PDC; and Warren PDC.

Mopar is a combination of motor and parts, which was formed nearly a century ago. Stellantis says it has 20 U.S. Mopar parts and distribution centers and more than 2,000 active employees in the unit.
Mopar was an expected major growth area for company predecessor Fiat Chrysler, which established a growth plan for the employees and facilities. But the sites were set up before Amazon’s major push for mega distribution centers, which have changed how many of them do business.
Stellantis’ proposal also includes the elimination of wage tiers within the Mopar division. Those employees’ pay currently ranges from about $17 an hour to more than $30 an hour. The offer also includes a moratorium on selling or spinning off the Mopar operations through the term of the four-year deal.
“We’re taking it seriously responsibly, and we’re trying to find creative solutions for each of those. We listened, we continue to listen. We continue to bargain in good faith,” Stewart said. “It really is about a win-win. You know, it’s not about warfare.” More

The creation of a new market is like the start of a long race. Competitors jockey for position as spectators excitedly clamour. Then, like races, markets enter a calmer second phase. The field orders itself into leaders and laggards. The crowds thin.In the contest to dominate the future of artificial intelligence, OpenAI, a startup backed by Microsoft, established an early lead by launching ChatGPT last November. The app reached 100m users faster than any before it. Rivals scrambled. Google and its corporate parent, Alphabet, rushed the release of a rival chatbot, Bard. So did startups like Anthropic. Venture capitalists poured over $40bn into AI firms in the first half of 2023, nearly a quarter of all venture dollars this year. Then the frenzy died down. Public interest in AI peaked a couple of months ago, according to data from Google searches. Unique monthly visits to ChatGPT’s website have declined from 210m in May to 180m now (see chart).image: The EconomistThe emerging order still sees OpenAI ahead technologically. Its latest AI model, GPT-4, is beating others on a variety of benchmarks (such as an ability to answer reading and maths questions). In head-to-head comparisons, it ranks roughly as far ahead of the current runner-up, Anthropic’s Claude 2, as the world’s top chess player does against his closest rival—a decent lead, even if not insurmountable. More important, OpenAI is beginning to make real money. According to The Information, an online technology publication, it is earning revenues at an annualised rate of $1bn, compared with a trifling $28m in the year before ChatGPT’s launch.Can OpenAI translate its early edge into an enduring advantage, and join the ranks of big tech? To do so it must avoid the fate of erstwhile tech pioneers, from Netscape to Myspace, which were overtaken by rivals that learnt from their early successes and stumbles. And as it is a first mover, the decisions it takes will also say much about the broader direction of a nascent industry.OpenAI is a curious firm. It was founded in 2015 by a clutch of entrepreneurs including Sam Altman, its current boss, and Elon Musk, Tesla’s technophilic chief executive, as a non-profit venture. Its aim was to build artificial general intelligence (AGI), which would equal or surpass human capacity in all types of intellectual tasks. The pursuit of something so outlandish meant that it had its pick of the world’s most ambitious AI technologists. While working on an AI that could master a video game called “Dota”, they alighted on a simple approach that involved harnessing oodles of computing power, says an early employee who has since left. When in 2017 researchers at Google published a paper describing a revolutionary machine-learning technique they christened the “transformer”, OpenAI’s boffins realised that they could scale it up by combining untold quantities of data scraped from the internet with processing oomph. The result was the general-purpose transformer, or GPT for short.Obtaining the necessary resources required OpenAI to employ some engineering of the financial variety. In 2019 it created a “capped-profit company” within its non-profit structure. Initially, investors in this business could make 100 times their initial investment—but no more. Rather than distribute equity, the firm distributes claims on a share of future profits that come without ownership rights (“profit-participation units”). What is more, OpenAI says it may reinvest all profits until the board decides that OpenAI’s goal of achieving AGI has been reached. OpenAI stresses that it is a “high-risk investment” and should be viewed as more akin to a “donation”. “We’re not for everybody,” says Brad Lightcap, OpenAI’s chief operating officer and its financial guru.Maybe not, but with the exception of Mr Musk, who pulled out in 2018 and is now building his own AI model, just about everybody seems to want a piece of OpenAI regardless. Investors appear confident that they can achieve venture-scale returns if the firm keeps growing. In order to remain attractive to investors, the company itself has loosened the profit cap and switched to one based on the annual rate of return (though it will not confirm what the maximum rate is). Academic debates about the meaning of AGI aside, the profit units themselves can be sold on the market just like standard equities. The firm has already offered several opportunities for early employees to sell their units.SoftBank, a risk-addled tech-investment house from Japan, is the latest to be seeking to place a big bet on OpenAI. The startup has so far raised a total of around $14bn. Most of it, perhaps $13bn, has come from Microsoft, whose Azure cloud division is also furnishing OpenAI with the computing power it needs. In exchange, the software titan will receive the lion’s share of OpenAI’s profits—if these are ever handed over. More important in the short term, it gets to license OpenAI’s technology and offer this to its own corporate customers, which include most of the world’s largest companies.It is just as well that OpenAI is attracting deep-pocketed backers. For the firm needs an awful lot of capital to procure the data and computing power necessary to keep creating ever more intelligent models. Mr Altman has said that OpenAI could well end up being “the most capital-intensive startup in Silicon Valley history”. OpenAI’s most recent model, GPT-4, is estimated to have cost around $100m to train, several times more than GPT-3.For the time being, investors appear happy to pour more money into the business. But they eventually expect a return. And for its part Openai has realised that, if it is to achieve its mission, it must become like any other fledgling business and think hard about its costs and its revenues.GPT-4 already exhibits a degree of cost-consciousness. For example, notes Dylan Patel of SemiAnalysis, a research firm, it was not a single giant model but a mixture of 16 smaller models. That makes it more difficult—and so costlier—to build than a monolithic model. But it is then cheaper to actually use the model once it has been trained. because not all the smaller models need be used to answer questions. Cost is also a big reason why OpenAI is not training its next big model, GPT-5. Instead, say sources familiar with the firm, it is building GPT-4.5, which would have “similar quality” to GPT-4 but cost “a lot less to run”.But it is on the revenue-generating side of business that OpenAI is most transformed, and where it has been most energetic of late. AI can create a lot of value long before AGI brains are as versatile as human ones, says Mr Lightcap. OpenAI’s models are generalist, trained on a vast amount of data and capable of doing a variety of tasks. The ChatGPT craze has made OpenAI the default option for consumers, developers and businesses keen to embrace the technology. Despite the recent dip, ChatGPT still receives 60% of traffic to the top 50 generative-AI websites, according to a study by Andreessen Horowitz, a venture-capital (VC) firm which has invested in OpenAI (see chart).image: The EconomistYet OpenAI is no longer only—or even primarily—about ChatGPT. It is increasingly becoming a business-to-business platform. It is creating bespoke products of its own for big corporate customers, which include Morgan Stanley, an investment bank. It also offers tools for developers to build products using its models; on November 6th it is expected to unveil new ones at its first developer conference. And it has a $175m pot to invest in smaller AI startups building applications on top of its platform, which at once promotes its models and allows it to capture value if the application-builders strike gold. To further spread its technology, it is handing out perks to AI firms at Y Combinator, a Silicon Valley startup nursery that Mr Altman used to lead. John Luttig of Founders Fund (a VC firm which also has a stake in OpenAI), thinks that this vast and diverse distribution may be even more important than any technical advantage.Being the first mover certainly plays in OpenAI’s favour. GPT-like models’ high fixed costs erect high barriers to entry for competitors. That in turn may make it easier for OpenAI to lock in corporate customers. If they are to share internal company data in order to fine-tune the model to their needs, many clients may prefer not to do so more than once—for cyber-security reasons, or simply because it is costly to move data from one AI provider to another, as it already is between computing clouds. Teaching big models to think also requires lots of tacit engineering know-how, from recognising high-quality data to knowing the tricks to quickly debug the source code. Mr Altman has speculated that fewer than 50 people in the world are at the true model-training frontier. A lot of them work for OpenAI.These are all real advantages. But they do not guarantee OpenAI’s continued dominance. For one thing, the sort of network effects where scale begets more scale, which have helped turn Alphabet, Amazon and Meta into quasi-monopolists in search, e-commerce and social networking, respectively, have yet to materialise. Despite its vast number of users, GPT-4 is hardly better today than it was six months ago. Although further tuning with user data has made it less likely to go off the rails, its overall performance has changed in unpredictable ways, in some cases for the worse.Being a first mover in model-building may also bring some disadvantages. The biggest cost for modellers is not training but experimentation. Plenty of ideas went nowhere before the one that worked got to the training stage. That is why OpenAI is estimated to have lost $500m last year, even though GPT-4 cost one-fifth as much to train. News of ideas that do not pay off tends to spread quickly throughout AI world. This helps OpenAI’s competitors avoid going down costly blind alleys.As for customers, many are trying to reduce their dependence on OpenAI, fearful of being locked into its products and thus at its mercy. Anthropic, which was founded by defectors from OpenAI, has already become a popular second choice for many AI startups. Soon businesses may have more cutting-edge alternatives. Google is building Gemini, a model believed to be more powerful than GPT-4. Even Microsoft is, despite its partnership with OpenAI, something of a competitor. It has access to GPT-4’s black box, as well as a vast sales force with long-standing ties to the world’s biggest corporate IT departments. This array of choices diminishes OpenAI’s pricing power. It is also forcing Mr Altman’s firm to keep training better models if it wants to stay ahead.The fact that OpenAI’s models are a black box also reduces its appeal to some potential users, including large businesses concerned about data privacy. They may prefer more transparent “open-source” models like Meta’s LLaMA 2. Sophisticated software firms, meanwhile, may want to build their own model from scratch, in order to exercise full control over its behavour.Others are moving away from generality—the ability to do many things rather than just one thing—by building cheaper models that are trained on narrower sets of data, or to do a specific task. A startup called Replit has trained one narrowly to write computer programs. It sits atop Databricks, an AI cloud platform which counts Nvidia, a $1trn maker of specialist AI semiconductors, among its investors. Another called Character AI has designed a model that lets people create virtual personalities based on real or imagined characters that can then converse with other users. It is the second-most popular AI app behind ChatGPT.The core question, notes Kevin Kwok, a venture capitalist (who is not a backer of OpenAI), is how much value is derived from a model’s generality. If not much, then the industry may be dominated by many specialist firms, like Replit or Character AI. If a lot, then big models such as those of OpenAI or Google may come out on top.Mike Speiser of Sutter Hill Ventures (another non-OpenAI backer) suspects that the market will end up containing a handful of large generalist models, with a long tail of task-specific models. If AI turns out to be all it is cracked up to be, being an oligopolist could still earn OpenAI a pretty penny. And if its backers really do see any of that penny only after the company has created a human-like thinking machine, then all bets are off. ■ More

The Writers Guild of America said it will return to the negotiating table with Hollywood producers on Wednesday as the production shutdown drags on.
AMPTP, which represents studios, confirmed the upcoming negotiations, providing no additional comment.
SAG-AFTRA, the actors’ union, has not yet indicated a time in which they would return to the negotiating table.

Members of the Writers Guild of America East are joined by SAG-AFTRA members as they picket at the Warner Bros. Discovery NYC office on July 13, 2023 in New York City.
Michael M. Santiago | Getty Images

The Writers Guild of America said Monday that the union will resume negotiations with Hollywood studios on Wednesday as a shutdown of productions across the TV and movie business drags on.
The announcement comes on the 139th day of the strike, which began May 2. The union told its members to continue joining picket lines as the talks resume. “You might not hear from us in the coming days while we are negotiating, but know that our focus is getting a fair deal for writers as soon as possible,” WGA said.

A spokesperson for the Alliance of Motion Picture and Television Producers, which represents the companies, confirmed the talks but offered no further comment.
Dual writers’ and actors’ strikes have halted the production of several big-name shows and films such as “Stranger Things,” Disney and Marvel’s “Blade,” AppleTV+’s “Severance” and Paramount’s “Evil.” Production companies have also taken a financial blow as a result of the strikes. Warner Bros. Discovery warned investors last week of a $300 million to $500 million hit to its earnings, due to the ongoing strikes.
There may be more labor unrest to come in Hollywood, too. In a first for visual effects workers, Marvel Studios VFX artists voted unanimously last week to join the International Alliance of Theatrical Stage Employees union. Now, the newly formed union is pursuing negotiations with Marvel, which is owned by Disney, to draft a contract.
Elsewhere, actor Drew Barrymore and comedian Bill Maher faced widespread criticism when they announced the return of their talk shows despite the WGA strike. Both Barrymore and Maher reversed their decisions this week following the backlash.
The last time WGA went on strike in 2007, an agreement was reached after 100 days after the work stoppage bled into February 2008. The WGA represents 11,500 screenwriters for film and television.

The WGA is calling for standardized compensation and residuals for streaming and theatrical releases. It also wants increased contributions to the pension plan and health fund. Furthermore, as artificial intelligence has gained prominence in the last year, the union is calling on the AMPTP to regulate the use of material produced using AI.

What about the SAG-AFTRA strike?

Despite the apparent progress being made between the WGA and the AMPTP, the Screen Actors Guild and American Federation of Television and Radio Artists (SAG-AFTRA), which started striking July 14, has not indicated a time in which they would return to the negotiating table.
SAG-AFTRA represents approximately 160,000 actors, media presenters, dancers, and more media professionals. SAG-AFTRA is currently granting some independent projects based within the U.S. the ability to begin production as part of an interim agreement.
SAG-AFTRA’s willingness to negotiate with the AMPTP could hinge on the result of negotiations with the WGA.
“SAG-AFTRA’s negotiating team remains ready at a moment’s notice to go back to the bargaining table to secure a righteous deal,” the labor union said in August. “Unfortunately, as we’ve seen from the recent news out of the WGA negotiations, it appears the AMPTP is still unwilling to make the concessions necessary to make a fair deal that would bring the strikes to a close.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is a member of the Alliance of Motion Picture and Television Producers. The AMPTP is currently negotiating with striking writers and actors in Hollywood. More

The vast majority of adults (92%) have reduced their spending over the past six months, according to a poll fielded on behalf of CNBC by Morning Consult.
Looking ahead to the all-important holiday shopping season, a warning for retailers: More than three quarters of all U.S. adults surveyed (76%) plan to cut back on spending for non-essential items.
Higher-income Americans, meanwhile, are starting to feel a little better about the economy.

U.S. consumers have cut back on spending this year, and they plan to continue to do so through the holidays, a new CNBC-Morning Consult survey has found.
The vast majority of adults (92%) have reduced their spending over the past six months, according to a poll fielded on behalf of CNBC by Morning Consult, a company that conducts survey research to inform decision-making. The poll surveyed 4,403 U.S. adults between Tuesday and Thursday.

Consumers remain cautious in their spending and they’re being more discerning about where and when to part with hard-earned cash. Inflation has come down, but remains stubbornly high. Broader economic uncertainty and labor unrest, amid striking auto workers in Detroit and writers and actors in Hollywood, have put consumer companies on watch.
The most common categories for spending cuts over the past six months were clothing and apparel (63%), restaurants and bars (62%), and entertainment outside the house (56%), a pattern that held steady from our June survey. The next biggest categories for cuts were groceries (54%), recreational travel and vacations (53%) and electronics (50%.)

Shoppers along the Magnificent Mile shopping district in Chicago, Illinois, US, on Tuesday, Aug. 15, 2023. 
Jamie Kelter Davis | Bloomberg | Getty Images

Looking ahead to the all-important holiday shopping season, a warning for retailers: More than three quarters of all U.S. adults surveyed (76%) plan to cut back on spending for non-essential items and 62% expect to cut back on essential items “sometimes” or “more often” over the next six months, the survey found.
Just how acutely consumers reported feeling the impact of the current economic situation varied among socio-economic groups. And it wasn’t always those making the least that reported feeling most pinched.
More than half (55%) of households earning $50,000 or less (lower-income) said they’re feeling the impact of the economy on their personal finances, while 61% of households $50,000 to $100,000 (middle-income) and 46% of households making at least $100,000 (higher-income) reported the same.
This marks a significant improvement in sentiment for higher income households from our prior survey. In June, more than half of higher-income consumers (55%) said they were feeling a negative impact on their finances. Higher-income households are in fact moving toward feeling that the economic situation is having a positive impact (30% in September, up from 21% in June.) More

New York state officials have begun ramping up efforts to stop the sale of marijuana by unlicensed operators, who are circumventing tax requirements and undermining the state’s legal weed rollout.
An estimated 1,500 unlicensed retailers are selling weed in New York City.
The city is going after landlords, too, issuing fines of up to $10,000 to those who knowingly lease commercial property for illegal weed sales.

A pedestrian passes a smoke shop in New York City on June 16, 2023. New York authorities are cracking down on unlicensed smoke shops that are selling cannabis.
Spencer Platt | Getty Images News | Getty Images

New York officials are ramping up efforts to stop the statewide proliferation of unlicensed smoke shops selling marijuana, as the state struggles to boot up its legal marketplace.
Since cannabis became legal in the state in 2021, thousands of unlicensed vendors selling marijuana, edibles, vape products and more have been undermining the state’s legal weed industry, with the issue being most pronounced in New York City. Currently, there are just 23 legal dispensaries open across the state, with only nine in New York City.

A new report by New York City’s Independent Budget Office determined that an estimated 1,500 unlicensed retailers in the city may hold as much as $484 million worth of marijuana products. If all those items were sold legally, the sales would generate $19.4 million in revenue for the city, the report found.
The state has started to crack down on the unlicensed shops by increasing inspections of stores, which can face fines or closure. But its effort has only begun to chip away at the vendors, particularly in New York City.
“We’re getting to as many as we can,” said Daniel Haughney, enforcement director at the state Office of Cannabis Management, in an interview with CNBC.

A notice from New York state’s Office of Cannabis Management posted in a storefront window in New York City announces the seizure of “illicit cannabis” at the business, June 16, 2023.
Spencer Platt | Getty Images News | Getty Images

The state is employing increasingly aggressive tactics to curb the growth of weed’s black market, which consumers often turn to for cheaper, untaxed product. Cracking down on the stores is not only a legal consideration but also an economic one, as illicit sales do not bring revenue to the state. New York imposes a retail tax of 13% on all marijuana products and an additional tax based on potency levels of tetrahydrocannabinol, or THC, marijuana’s psychoactive component.
In addition to skirting the tax system, smoke shops operating illegally may also pose significant health risks. A 2022 study commissioned by the New York Medical Cannabis Industry Association that reviewed products from 20 illicit stores in New York City found about 40% contained harmful contaminants such as E.coli, lead and salmonella.

The state’s Cannabis Control Board announced Tuesday that it will make more licenses available by opening up applications to the general public as well as large multistate manufacturers and medical companies. Previously, retail licenses were limited only to applicants with prior marijuana-related convictions, under the state’s Conditional Adult Use Retail Dispensary, or CAURD, program. The move is expected to add more legal shops to the state.

How New York’s illegal weed crackdown is working

Haughney said his team, with the help of the Department of Taxation and Finance, has been increasing inspections at storefront businesses “throughout the entire state.” Officials began ramping up efforts in June.
“We’re hitting them with everything that we can,” he added.
If an illegal business fails to comply with violation notices and cease-and-desist orders, it can be subject to a seizure of product, closure of a store and daily fines that can reach $20,000.
The crackdown has moved beyond the operators of the stores.
In August, New York City enacted legislation that targets landlords who knowingly lease commercial real estate to unlicensed sellers. Under the bill, landlords can be fined up to $10,000 for raids on their property that yield illegal weed.
The Real Estate Board of New York supported the city’s bill, saying it provides “much-needed enforcement” that will “improve streetscapes” across New York City’s five boroughs.
“This commonsense law will keep bad actors out of commercial spaces and help ensure that real estate brokers and property owners are working with properly licensed retail establishments,” the board said in a statement to CNBC.
With each of these measures, Haughney said his team is beginning to see “more and more compliance.”
“As you see enforcement continue and as more and more licenses are issued for legal operators, you’ll see a shift happen where you’ll see less and less of the illegal shops,” said Haughney.
Illicit sales, while boosted by the delay in openings of legal dispensaries, are expected to drop in the coming years from an estimated $7 billion annually in 2023 to a projected $3 billion by 2030 in New York, according to New Frontier Data, a marijuana research firm. More

“We’ve got to get governments to stay out of sport. It’s absolutely vital,” golf legend Gary Player told CNBC.
Player said he backs the merger between Saudi-funded LIV Golf and the PGA Tour.
The hall of famer also is a golf ambassador for energy giant Saudi Aramco.

Legendary golfer Gary Player thinks government and sports shouldn’t mix, as the golf world goes through a major merger that has triggered antitrust concerns.
Speaking to CNBC at the Berenberg Invitational on Monday, the South African golfer said the two have become “too intertwined.”

“We’ve got to get governments to stay out of sport. It’s absolutely vital,” the 87-year-old hall of famer said. “Let sports bodies stick to sports and politicians should stick to politics.”
Player, though, is no stranger to political involvement in sports. He was an ambassador for Golf Saudi, an organization pushing to make the Kingdom of Saudi Arabia a more prominent force in the sport. Today, he is an ambassador for the Saudi energy giant Aramco. He displays its logo on his golf shirts.
Player also said he supports the proposed merger between Saudi-backed LIV Golf and the PGA Tour, which has drawn criticism and scrutiny from regulators and lawmakers, not to mention golfers. (Previously, Player has spoken out against players leaving the PGA Tour to join LIV Golf, saying it’s for “guys that can’t win one the regular tour any more.”)
“With getting together now, the players will have more money to play for forever, whereas it might not have gone on forever,” he said. “The world will benefit by putting the parties together.”
Last week, a U.S. Senate subcommittee held its second hearing on the proposed merger. Connecticut Sen. Richard Blumenthal, the Democratic chairman of the subcommittee, subpoenaed the Saudi Public Investment Fund for information related to the merger and other U.S. investments.

Player also said he’s against athletes getting too political, specifically singling out athletes who don’t stand for the national anthem as well as the political views of the U.S. women’s national soccer team.

Player on golf and charity

Player, who is just one of five players to win all four majors, has won nine majors altogether, and has played golf with every president in the United States over the last 70 years, sounded off on the game he loves.
He offered his perspective on upcoming Ryder Cup at Marco Simone in Italy.
“I’m very much against captain’s picks,” he said. “Incentivization is important. Have a system, you know the leading 12 events … they are going to represent the United States. That’s how it should be,” said Player.
In 1989, the United States Ryder Cup team adopted the highly debated use of “captain’s picks,” where team captains pick who represents the United States. The practice has been around more than four decades internationally.
Player was in Bedford Hill, New York, for his celebrity golf event which raises money for pancreatic cancer, from which his wife died in 2021.
“Golf is the greatest catalyst for raising money for charities around the world,” he said. More

Builder confidence in the single-family housing market fell 5 points in September to 45.
Fifty is the line between positive and negative sentiment.
Current sales conditions fell 6 points to 51, and sales expectations in the next six months also fell 6 points to 49. Buyer traffic dropped 5 points to 30.

U.S. homebuilders are feeling pessimistic about their business for the first time in seven months, thanks to stubbornly high mortgage rates.
Builder confidence in the single-family housing market fell 5 points in September to 45 on the National Association of Home Builders/Wells Fargo Housing Market Index. The decrease follows a 6-point drop in August. Anything below 50 is considered negative.

The index’s three components all declined. Current sales conditions fell 6 points to 51, and sales expectations in the next six months also dropped 6 points to 49. Buyer traffic decreased 5 points to 30.
Builders cite weaker affordability due to higher mortgage rates. The average rate on the popular 30-year fixed mortgage has been over 7% since June.
As a result, builders are starting to offer more incentives again. In September, 32% of builders said they cut prices, compared with 25% in August. That’s the largest share of builders reducing prices since December 2022, when 35% were doing so.
The average price cut was 6%.
“High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower,” said Robert Dietz, NAHB’s chief economist, in a release.

A shift is also occurring among those buyers who are still in the market. The NAHB added a new question to this month’s survey and found that 42% of new single-family home buyers year to date were first-time buyers. That is much higher than the historical norm of around 27%.
While builders are still benefiting from the lack of supply on the existing sales market, they are also facing hurdles other than higher interest rates.
“On the supply-side front, builders continue to grapple with shortages of construction workers, buildable lots and distribution transformers, which is further adding to housing affordability woes. Insurance cost and availability is also a growing concern for the housing sector,” said NAHB Chairman Alicia Huey, a homebuilder and developer from Birmingham, Alabama.
Regionally, on a three-month moving average, sentiment in the Northeast fell 2 points to 54. In the Midwest it dropped 3 points to 42.
In the South it declined 4 points to 54, and in the West it decreased 3 points to 47. More