TheChek News Flow

Governments outline plan to encourage train companies to launch services that could cut journey time to five hours

The UK and Swiss governments have outlined plans to encourage train companies to launch direct services between London and Switzerland, in an attempt to tap into booming demand for long-distance rail travel in Europe.

The two governments on Friday announced a memorandum of understanding to “lay the groundwork for future commercial services”, linking the two countries through the Channel Tunnel rail link.

A direct service would aim to appeal to both business and leisure travellers and would cut the journey time from London to Geneva to about five hours, according to people in the industry. At the moment, the same journey takes about 7.5 hours by train with a transfer in Paris. A flight to Geneva from London takes about one hour and 40 minutes.

A direct rail service would present logistical challenges because of the need to build border infrastructure at Swiss stations and for any new operator to buy trains compatible with the Channel Tunnel’s stringent safety rules. The governments said they would explore ways to overcome such barriers.

One option being explored is to build temporary “modular” border controls and security screening in the Swiss stations as this would reduce to keep costs down, one person involved said.

Demand for long-distance intercity rail travel in Europe has boomed since the coronavirus pandemic, in part because of passengers’ environmental concerns around flying, according to industry executives.

“We welcome steps to strengthen sustainable travel between the UK and Switzerland . . . This is a first step in a wider plan with our partners to grow connections in the greenest way,” Gwendoline Cazenave, chief executive of Eurostar, said.

Still, several executives cautioned that the barriers to entry on cross-Channel routes remained high, and that any new services between London and Switzerland would be years away.

Albert Rösti, one of seven federal councillors in the executive arm of the Swiss government, said a London to Switzerland service would be an “ambitious goal” but that it was “really likely” services would launch within five to 10 years.

The Swiss government said that stations in Geneva, Zurich, and Basel could take trains from London but that these would need to be fitted with border control facilities. Switzerland’s federal transport department would present a plan to the central government next year on how this could work, it added.

Eurostar is the only company that runs international trains from London to stations in France, Belgium and Holland.

Swiss Federal Railways (SBB), the national rail company of Switzerland, said it welcomed the plan. It said the requirements for a direct connection, which would be in the 2030s at the earliest, would include investment in new high-speed trains.

Several other operators, including the Italian state railway and Richard Branson’s Virgin Group, have applied for permission to launch their own services from London to the continent, in the most significant challenges yet to Eurostar’s 30-year monopoly.

The owner of the high-speed rail line from London to the channel tunnel, London St Pancras Highspeed, earlier this year unveiled financial incentives to encourage operators to launch more services between London and mainland Europe.

Its chief executive Robert Sinclair said the agreement between the UK and Switzerland “brings us one step closer to direct high-speed services between London and Switzerland”.

Skirmish is first test of Beijing’s military hardware against advanced western technology

Even before the fog of war had begun to lift, the Chengdu Aircraft Company’s stock had started to soar.

Almost three decades after first taking to the skies, the Chinese plane-maker’s first fighter jet, the J-10 Vigorous Dragon, had finally seen combat — and survived.

By 4am on May 7, Chinese diplomats in Islamabad were at the foreign ministry, poring over results from the first face-off between modern Chinese warplanes, replete with missiles and radars untested in battle, and advanced western hardware deployed by India.

As evidence mounted, while remaining inconclusive, that a Pakistani pilot in the latest variant of the Vigorous Dragon may have shot down India’s French-made Rafale jet, Chengdu’s share price leapt more than 40 per cent in just two days.

“There’s no better advertisement than a real combat situation,” said Yun Sun, a specialist in Chinese military affairs at the Stimson Center in Washington DC. “This came as a pleasant surprise for China . . . the result is quite striking.”

While India and Pakistan may be embroiled in their deepest skirmish in decades, the conflict is also a testing ground for equipment crucial to a different rivalry — that between China and the US-led western alliance.

About 81 per cent of Pakistan’s military equipment comes from China, including more than half its 400-strong fighter and ground attack aircraft, according to estimates by the Stockholm Peace Research Institute and the International Institute for Strategic Studies. 

That reflects an “all weather friendship” that China has cultivated since the 1960s with Pakistan to try and ringfence India. The materiel it provides Pakistan has evolved alongside China’s own defence industry, said Andrew Small, an expert on Pakistan-China relations at the German Marshall Foundation.

“Aside from the co-operation on nuclear weapons and ballistic missiles, a lot of what China supplied used to be low-end stuff — tanks, artillery, small arms,” said Small. Now, however, Pakistan “is becoming a showcase for some of China’s newer capabilities”.

India, meanwhile, has emerged as the world’s largest weapons importer as its wealth and regional ambitions have grown.

Over the past decade, it has shifted from a reliance on Russian suppliers to the US, France and Israel for almost half of its own recent purchases, including sophisticated fighter jets, transport aircraft and combat and surveillance drones.

“This is the most important global aspect here — this is the first time Chinese military equipment has been tested against top notch western equipment,” said Sushant Singh, lecturer at South Asian Studies at Yale University.

“Whenever and however this ends, the balance sheet will tell us what will happen in Taiwan, and which direction should western defence companies go to counter the low cost and high tech capabilities that the Chinese have shown.”

When countries go to war, their allies watch and learn. After Ukraine repelled a nearly 50-mile column of Russian armour — tanks, armoured vehicles and others — using modern, shoulder-fired British and American missiles, Indian diplomats in Kyiv were monitoring it closely.

“Is it true what they say about Russian tanks — clumsy, easily lolly-popped,” one asked an FT journalist returning from the frontline, referring to how missiles would blow the tops off tanks.

When Taiwan saw how effective the US-made Himars medium-range precision missile system was at hitting Russian targets behind the frontline, it lobbied to move up the delivery of its own orders. By next year, it will own almost 30 of the truck-mounted systems — which is more than Ukraine.

Even short skirmishes, such as those India and Pakistan have regularly fought, serve a unique purpose. Enemies test each other, and show off their own capabilities, seeking to enforce existing red lines and set new ones.

They generate vast amounts of operational data that shapes the next skirmish — or wins the next war. Allies share that data and arms manufacturers analyse it, tweaking their own weapons systems.

Defence attachés from China’s western rivals were waiting “impatiently”, said one in New Delhi, for India to share the radar and electronic signatures of the J-10C while in combat mode so that their own aerial defences could be trained on it.

Similarly for China, this skirmish was a test not just of the aircraft but the sophisticated radar system — called an active electronically scanned array — mounted in the front of the plane. The combat tested its ability to not just hunt out threats but help guide the missiles.

Aurangzeb Ahmed, Pakistan’s deputy chief of air operations, said PL-15 variants were among the missiles used in the skirmish this week. The hour-long engagement would be “studied in the classroom”, bragged Ahmed. “We knocked some sense into these guys.”

Robert Tollast, a researcher at the Royal United Services Institute in London, said the use of PL-15E missile could be “highly significant”. Indian media reported that an intact PL-15 had been recovered, providing a chance to study its secrets.

“If confirmed, we have now seen the demonstration of a Chinese-made AESA on a beyond-visual-range-missile, used in combat,” he said.

Western nations and Russia have been battle testing their versions of AESA’s for decades. Details of just this single skirmish — such as how many missiles were fired to successfully hit a target — “could be tremendously useful for the Chinese in evaluating the capability of this weapon”, Tollast said.

Neither the Chinese Ministry of Foreign Affairs, nor Chengdu Aircraft responded to a request for comment.

On the other side of the ledger, the success of Indian missiles — many of them reportedly long-range French SCALP missiles — in finding their targets showed both the weakness and paucity of Pakistani aerial defences.

Pakistan is known to deploy China’s HQ-9 systems, which are a generation behind the sophistication of Russian S-400s and are at the top-end of India’s inventory.

“The fact is that even at a time of extreme high alert, Indian missiles penetrated Pakistani airspace without being detected,” said Laxman Kumar Behera, who specialises on India’s national security at Jawaharlal Nehru University in New Delhi.

India’s retaliation on Thursday targeted Pakistan’s “air defence radars and systems at a number of locations in Pakistan”, according to the Indian military.

“That’s a very precise display of a very high-end capability — taking out the defences, rather than an actual target,” said a senior western diplomat based in Delhi. “It’s a carefully calibrated warning — it says, look, if we can come take the lock off your door, then we can come into the house whenever we want.”

Both India and Pakistan have gleaned crucial details about their rival’s strengths from past clashes — and identified weaknesses of their own.

After India successfully wrested back territory in the Himalayas from a Pakistani encroachment in 1999, an internal inquiry showed its ageing Russian fleet of MiG’s struggled to manoeuvre in the mountain passes, or find targets in the snow while evading shoulder mounted missiles.

Three aircraft were shot down in three days before India switched to French Mirages — the first deployment of precision and laser guided missiles by the Indian Air Force, and the beginning of a shift away from Russian to western aircraft.

Similarly, after India responded to the 2019 killing of 40 security personnel by a Pakistan-based militant group with air strikes in the Balakot region of Pakistan, it not only lost a MiG 21 aircraft but its forces mistakenly shot down a helicopter in a friendly fire incident, killing seven.

“The officers of the Pakistani army have looked after me very well — they are thorough gentlemen,” the captured pilot was shown saying in a propaganda video before his release. “And the tea is fantastic.”

The two incidents underscored that India lacked sufficient airborne early warning and control systems — planes that fly at high altitudes carrying sophisticated radars and sensors that can detect enemy aircraft, missiles and drones at range.

But India’s bureaucratic challenges made learning from each skirmish difficult, and inefficient, as compared to a simpler procurement system for Pakistan, which has one main supplier — China — and a military that dominates the country.

Only in March this year did India issue an “acceptance of necessity” notice to triple India’s fleet of such early warning aircraft to 18. Their deployment is years away.

“If these tit-for-tat aerial retaliations continue for much longer, India will feel their absence sorely,” said a second western defence attaché based in New Delhi.

“If it turns out that India lost a French jet to a Chinese missile fired from over 100km away, then that need is clearly urgent.”

Spanish bank has since raised €7bn from sale of Polish stake as it pivots from Europe to Americas

Santander rejected a bid worth about £11bn for its UK retail bank from NatWest earlier this year after the Spanish lender said the offer was too low.

The approach by the state-backed British lender, which was being advised by Morgan Stanley and UBS, is no longer live, according to people familiar with the matter.

Santander has since raised €7bn from the sale of a large stake in its Polish unit this week, making any sale of its UK unit less likely. The Spanish lender said it would redeploy some of the proceeds from the stake sale to invest in its other regions, as it accelerates a strategic pivot away from Europe to the Americas.

NatWest’s approach — which would have led to the biggest UK banking deal since the financial crisis — comes as the British lender gears up to expand aggressively in its domestic market once the UK government sells the last of its £46bn crisis-era stake, which is expected in the coming weeks.

Paul Thwaite, the bank’s chief executive, previously said that it was on the “front foot” when it came to acquisitions. He has said that any purchase “needs to be absolutely compelling from a shareholder perspective”.

NatWest made an offer of “more than £10bn, but less than £12bn” for Santander UK, according to people familiar with the bid.

Santander’s UK subsidiary, which includes both retail and commercial banking, had total equity of £10.4bn at the end of last year, according to the group’s accounts, a metric that broadly reflects the market value of the business.

Meanwhile, the price agreed for its Polish unit equated to 2.2 times the tangible book value of that business, a considerably higher valuation than that of the overall group.

The bank also previously rejected a “low ball” offer for its UK ringfenced from Barclays last year, the Financial Times previously reported.

The Spanish group, which recently became the most valuable bank in continental Europe, is cutting back in some European countries to free up resources to expand in the Americas in a drive led by its executive chair Ana Botín. This has included a push in the US, where it has launched an aggressive expansion of its corporate and investment bank.

“We want to be a relevant bank in the US,” Jose Garcia Cantera, Santander’s chief financial officer, said last month.

Meanwhile, the bank has been reducing headcount in the UK, announcing more than 2,000 job cuts since last October as part of plans to cut costs and close branches. It employs about 18,000 staff in the UK and has 14mn customers.

The group had become frustrated with the UK unit’s high cost base and its weaker returns relative to some of the lender’s other markets, as well as Britain’s ringfencing regime, the FT previously reported. The Spanish bank has explored a number of options for its UK business, including exiting the market altogether.

One person familiar with the bank said that any potential suitors would now have to return with a “big offer for it to make sense” for Santander to offload its UK ringfenced bank, given its execution of the Polish stake sale.

Santander said: “As we have said, the UK is not for sale and is a core part of Santander’s diversified business model.”

NatWest declined to comment.

A Decade-Long Search for a Battery That Can End the Gasoline Era

Can a small Massachusetts start-up perfect a battery that would make electric vehicles cheaper and more convenient than conventional cars?

On a frigid day in early January, as she worked in her office in the Boston suburb of Billerica, Mass., Siyu Huang received a two-word text message.

“Spinning wheels,” it said. Attached was a short video clip showing a car on rollers in an indoor testing center.

To the untrained eye there was nothing remarkable in the video. The car could have been getting its emissions tested at a Connecticut auto repair shop (except it had no tailpipe). But to Ms. Huang, the chief executive of Factorial Energy, the video was a milestone in a quest that had already occupied a decade of her life.

Ms. Huang, her husband, Alex Yu, and their employees at Factorial had been working on a new kind of electric vehicle battery, known as solid state, that could turn the auto industry on its head in a few years — if a daunting number of technical challenges could be overcome.

For Ms. Huang and her company, the battery had the potential to change the way consumers think about electric vehicles, give the United States and Europe a leg up on China, and help save the planet.

Factorial is one of dozens of companies trying to invent batteries that can charge faster, go farther, and make electric cars cheaper and more convenient than gasoline vehicles. Transportation is the biggest source of man-made greenhouse gases, and electric vehicles could be a potent weapon against climate change and urban air pollution.

The video that landed in Ms. Huang’s phone was from Uwe Keller, the head of battery development at Mercedes-Benz, which had been supporting Factorial’s research with money and expertise.

The short clip, of a Mercedes sedan at a research lab near Stuttgart, Germany, signaled that the company had installed Factorial’s battery in a car — and that it could actually make the wheels move.

The test was an important step forward in a journey that had begun while Ms. Huang and Mr. Yu were still graduate students at Cornell University. Until then, all their work had been in laboratories. Ms. Huang was excited that their invention was venturing into the world.

Editors’ Picks

A Grand Comeback for a Grand Seaside Hotel

Is This the ‘Manosphere’ for Women?

‘Poker Face’ Returns With New Mysteries and Old Friends

But there was still a long way to go. The Mercedes with a Factorial battery hadn’t yet been taken out on the road. That was the only place the technology really mattered.

Many start-ups have produced solid-state battery prototypes. But no American or European carmaker has put one into a production vehicle and proved that the technology could survive the bumps, vibrations and moisture of the streets. Or if any have, they have kept it a secret.

In late 2023, Mr. Keller, a veteran Mercedes engineer, proposed to Ms. Huang that they try.

“We’re car guys,” Mr. Keller said later. “We believe in things really moving.”

Roots in China

Ms. Huang stands out in a niche dominated by men from Silicon Valley. Some brag about their 100-hour workweeks; she believes in a good night’s sleep. “Having a clear mind to make the right decision is more important than how many hours you work,” she said.

She is approachable and laughs easily, but also projects determination. She works from a sparsely decorated office in Billerica that looks out on a patch of forest crossed by power lines. The furnishings include a plain black bookcase, stocked with a few technical volumes, that she inherited from a previous tenant. Her diplomas from Cornell — a Ph.D. in chemistry and a master’s in business administration — hang on the wall.

Ms. Huang grew up in Nanjing, China, where she was in an elementary school program that had her gather environmental data. The program instilled an interest in chemistry and an awareness of the vehicle exhaust and industrial pollution choking Nanjing’s air. She realized, she recalled, that “we need to grow a planet that’s healthier for human beings.”

In a dormitory at Xiamen University on China’s southern coast, where she studied chemistry, she saw an advertisement for a Swedish exchange program. After spending two years there, she and Alex, whom she had known since they were students in China, were both accepted to doctoral programs in Cornell’s chemistry department. She arrived in Ithaca, N.Y., in 2009 with $3,000, which she had managed to save from her Swedish scholarship. They have both since become U.S. citizens.

They were star students, said Héctor Abruña, a professor at Cornell known for his research in electrochemistry. He still has a picture on his office bookshelf of himself with Mr. Yu and Ms. Huang in their commencement robes.

With an idea that grew out of Dr. Abruña’s lab and some seed money from the State of New York, Mr. Yu and Ms. Huang founded the company that later became Factorial while she was still completing her business degree.

“They are extremely dedicated and extremely bright,” said Dr. Abruña, who continues to advise Factorial. “Straight shooters — zero BS.”

Mr. Yu is now Factorial’s chief technology officer. The company is, in that sense, a family operation. Ms. Huang is reticent about their private life, declining to say even how many children they have.

Initially the company focused on improving the materials that allow batteries to store energy. That changed after Mercedes invested in Factorial in 2021. Mercedes was looking for a bigger technological leap and encouraged Factorial to pursue solid state.

The technology has that name because it eliminates the liquid chemical mixture, known as an electrolyte, that helps transport energy-laden ions inside a battery. Liquid electrolytes are highly flammable. Replacing them with a solid or gelatinlike electrolyte makes batteries safer.

A battery that doesn’t overheat can be charged faster, perhaps in as little time as it takes to fill a car with gasoline. And solid-state batteries pack more energy into a smaller space, reducing weight and increasing range.

But solid-state batteries have one big drawback that explains why you can’t buy a car with one today. Such battery cells are more prone to grow spiky irregularities that cause short circuits. Vast riches await any company that can overcome this problem and develop a battery that is durable, safe and reasonably easy to manufacture.

Despite obvious differences between Factorial and Mercedes — the start-up has a little more than 100 employees, compared with 175,000 — Ms. Huang’s working style meshed with the culture at Mercedes and its roots in Swabia, the region around Stuttgart where people are known for their no-nonsense approach and restraint.

Mr. Keller found Ms. Huang’s low-key, factual manner to be a welcome contrast to the hype and unfulfilled promises that are pervasive in the battery and technology industries. Factorial, he said, “has not been announcing, announcing, announcing and not delivering.”

‘Production hell’

It’s an axiom in the battery business that producing a cool prototype is the easy part. The challenge is figuring out how to make millions of solid-state batteries at a reasonable price.

Factorial confronted that problem in 2022, setting up a small pilot factory in Cheonan, South Korea, a city near Seoul known for its tech industry. The project became, in Ms. Huang’s words, “production hell” — the same phrase Elon Musk used when Tesla was struggling to mass-produce a sedan and nearly went bankrupt.

To make money, a battery factory can’t produce too many defective cells. Ideally the yield, the percentage of usable cells, should be at least 95 percent. Hitting that target is devilishly difficult, involving volatile chemicals and fragile separators layered and packaged into cells with zero margin for error. The machinery doing all this is encased in Plexiglas chambers and overseen by workers dressed in head-to-toe protective gear to prevent contamination.

Dozens of companies are trying to mass-produce solid-state cells, including big carmakers like Toyota and smaller ones like QuantumScape, a Silicon Valley start-up backed by Volkswagen. Mercedes, hedging its bets, is also working with ProLogium, a Taiwanese company.

Nio, a Chinese carmaker, sells a vehicle with what it advertises as a solid-state battery. Analysts say the technology is less advanced than what Factorial is developing, offering fewer advantages in weight and performance. But there is little doubt that Chinese companies are investing heavily in solid state. Nio did not respond to a request for comment.

Every company has its own closely guarded recipes and manufacturing processes. “It’s difficult to say which technology will win,” said Xiaoxi He, a technology analyst at IDTechEx, a research firm.

Partly because solid-state batteries are so difficult to manufacture, many auto executives are skeptical that they will make commercial sense anytime soon. Shares in many solid-state battery start-ups have plunged, and management turmoil is common.

Factorial has insulated itself from the harsh judgments of Wall Street by never selling stock. Its funding comes from private investors including WAVE Equity Partners, a Boston firm, and partners that include the South Korean automaker Hyundai; LG Chem, a South Korean company that makes battery materials; and Stellantis, which next year plans to test Factorial batteries in Dodge Charger muscle cars.

Projections of how soon solid-state batteries would be available have proved overly optimistic. Toyota displayed a futuristic prototype in 2020, but the company is still years away from selling a car with a solid-state battery.

Kurt Kelty, a vice president at General Motors in charge of batteries, is among those who will believe it when they see it. “We’re not banking on solid state,” Mr. Kelty said.

‘I don’t even know if we can make it’

In the beginning, Factorial’s prototype assembly line in South Korea had a yield of just 10 percent, meaning 90 percent of its batteries were faulty. Despite her preference for a good night’s sleep, Ms. Huang often had to wake up at 4 a.m. to deal with problems at the factory, which was operating around the clock. She was in South Korea at least once a month.

“There were always issues,” she said. “There was a point, I was like, I don’t even know if we can make it.”

By 2023, Factorial had produced enough cells suitable for an automobile that Mr. Keller, a soft-spoken, amiable man who has worked at Mercedes for 25 years, began thinking about installing them in a car. The cost and the risk of failure were high enough that he sought approval from his bosses. Armed with PowerPoint slides, Mr. Keller went to Ola Källenius, an imposing Swede who is chief executive at Mercedes.

Mr. Källenius’s office is at the top of a glass and steel high-rise in the middle of a sprawling manufacturing and development complex beside the Neckar River in Stuttgart.

Mr. Keller argued that road testing would help determine, among other things, whether the batteries would work with air cooling alone. If so, that would eliminate the need for a heavier, more costly liquid-cooled system.

Mr. Källenius signed off on the project, reasoning that a tangible goal would motivate the team and hasten development. He drew an analogy to Formula 1 racing. “If you’re chasing the leader, and suddenly you can see him, you get faster,” Mr. Källenius recalled.

Ms. Huang was a bit surprised when, in late 2023, Mr. Keller told her that Mercedes wanted to put the cells in a working vehicle. “We didn’t realize it was coming so soon, honestly speaking,” she said with a laugh.

But by June 2024, Factorial had managed to produce enough high-quality cells to announce that it had begun delivering them to Mercedes. In November, the factory in South Korea hit 85 percent yield, the best result yet. Ms. Huang and the Korean team celebrated by going out to a barbecue joint.

Mercedes still had to figure out how to package the cells in a way that would protect them from highway dirt and moisture. And it had to integrate the battery pack into a vehicle, connecting it to the car’s control systems.

The Factorial cells had one big drawback that made them hard to install in a car. They expanded when charged and shrank when discharged. In Mr. Keller’s words, they “breathed.”

Mr. Keller turned to engineers on the Mercedes Formula 1 racing team, who are accustomed to quickly solving technical problems. They devised a mechanism that expanded and shrank with the cells, maintaining constant pressure.

By Christmas 2024, a team working at Mercedes’s main research center in Sindelfingen, outside Stuttgart, texted Mr. Keller those two words: “spinning wheels.”

‘Finally I see you’

Mr. Keller confessed that he got a little emotional when his team sent him the video of the car. He waited until after Christmas to forward it to Ms. Huang with the same two words.

Several weeks later, the Mercedes engineers took the car with Factorial’s battery, an otherwise standard EQS electric sedan, to a company track for its first road test.

The engineers drove the car slowly at first. They carefully monitored technical data displayed on the dashboard screen.

They drove faster and faster until, by the fourth day, they reached autobahn speeds of 100 miles per hour. The battery didn’t blow up. In theory, it can power the car for 600 miles, more than most conventional cars can travel on a tank of gasoline.

Mr. Keller had been keeping Ms. Huang apprised of the progress, but she was still surprised when, during a meeting on marketing strategy in February, people from the Mercedes communications department mentioned that they had written a news release announcing the achievement.

“Do you want to take a look?” they asked.

She certainly did. The first successful road test with a Factorial battery was an enormously important moment, one they had been anticipating for years. Yet the teams at Mercedes and Factorial did not throw parties to celebrate. They still had work to do.

The next step is to equip a fleet of Mercedes vehicles with batteries, perfect the manufacturing process and do the testing required to begin selling them. That will probably take until 2028, at least. Many experts don’t expect cars with solid-state batteries to be widely available until 2030, at the earliest.

In April, Ms. Huang finally found time to travel to Stuttgart and ride in the car herself.

It was a clear spring day, with greenery sprouting in the German countryside and flowers beginning to bloom. Mercedes employees escorted her to a garage in Sindelfingen, where the automaker also has a large factory complex.

Ms. Huang had seen many photos of the car, but she still felt a thrill when the garage doors opened. It felt “like a long-lost friend,” she said. “Like, ‘Finally I see you!’”

A Mercedes driver took her for a spin on the test track, zooming down an asphalt straightaway then around a banked curve that, Ms. Huang said, felt like a roller coaster.

Inside the car, there was no way to perceive the difference with the Factorial battery compared with a conventional one. “But it’s just so special because it’s with our battery.”

Gapping down
In reaction to earnings/guidance:

Other news:

Gapping up
In reaction to earnings/guidance:

Other news:

The tech entrepreneur on the risks and opportunities of AI, his dispute with Elon Musk and why he has the ‘most important job maybe in history’

Sam Altman’s escape from the Silicon Valley pack is a sprawling farm at the end of a road that snakes through the vine-swept hills in Napa Valley. I spot the 40-year-old with slightly tousled hair in the open-plan kitchen of the wide bay-windowed house, and I step right in. His bemused look tells me that I wasn’t expected. I am, it turns out, nearly an hour early, but the man behind ChatGPT will finish up a meeting and join me in the garden. I wait under a grapevine-shaded pergola that runs along the house.

For a Lunch with the FT, Altman offered to cook a simple vegetarian meal at his farm instead of meeting me at a restaurant of his choice, where he’s likely to be hounded by selfie-seekers. Since OpenAI, the company he runs, released the generative AI model in 2022, Altman has been catapulted to the status of worldwide celebrity. Last year, he married his software engineer boyfriend and they’ve recently had a baby boy via surrogacy (he consulted ChatGPT on which crib to buy) so he’s been spending more time on the Napa farm.

Altman takes only a few minutes to join me outside. He has built OpenAI into one of the fastest-growing companies ever, with a staggering valuation of more than $250bn, and accelerated a fierce race for AI supremacy: the pursuit of artificial general intelligence, when a machine can surpass the cognitive abilities of humans, not only absorbing knowledge but reasoning and learning on its own.

But it has been a rollercoaster journey in which Altman has been fired and rehired by his own company, his character and commitment to the safe development of AI subjected to bruising questions. He’s wrestled with Elon Musk, with whom he co-founded OpenAI, and sparred with Scarlett Johansson, who accused him of using an “eerily similar” voice to her own to train a chatbot. Having stolen a march on more established competitors (Google in particular, given that it has long had the lead in AI research), he’s been courted by presidents and prime ministers and he has seduced some of the world’s biggest investors.

There are some people who are, like, ‘all AI art is terrible’, but then there’s a lot of artists who are, like, ‘this is the best tool ever’

I find Altman brimming with confidence as our conversation ranges from AI products to the existential question of an AI future that a handful of optimistic technologists are steadily leading us to, whether we like it or not. Radiating ambition, he sounds like a man convinced of his own destiny. He tells me that he has the “coolest, most important job maybe in history” and while he used to think AI was as consequential as the Industrial Revolution, he now reckons the “explosion in creativity” makes the Renaissance a more apt analogy.

We are meeting soon after the release of OpenAI’s o3, a more advanced AI model with improved capability to reason and generate images. It is, he says, an important step towards the creation of AI agents that can execute tasks on humans’ behalf, and which all leading AI companies are furiously pursuing. “People are saying like, this is . . . genius-level intelligence,” he gushes.

No sooner was the tool released than users flooded the internet with images generated in the style of the Japanese animation house Studio Ghibli. That gave Altman and OpenAI a sensational marketing boost, but renewed questions about the liberal use of others’ intellectual property to train AI models and generate art. Altman says compensation for artists may be required (his company has done licensing deals with publishers, including the FT), but he prefers to put the tools out into the world and then find answers to questions that arise.

“There are some people who are, like, ‘all AI art is terrible’, but then there’s a lot of artists who are, like, ‘this is the best tool ever, it’s like the invention of the camera’,” says Altman. “We agree we need a new business model for this kind of a world, but what it is, the community is still sort of feeling their way through. I know that we’ve got to converge on what it should be.”

We are back in the kitchen and I watch Altman season with cumin the yellow and orange carrots grown on the farm, which are then roasted in the oven. With impressive determination, he chops an enormous amount of garlic, which he tosses into a pan with red chilli peppers, walnuts, parsley and pecorino to make what looks like a Californian take on aglio e olio spaghetti. The salad leaves, with thinly sliced carrots and radishes, are in the fridge already and need only dressing. Altman visibly enjoys cooking and, as I will soon find out, is rather good at it.

As we talk, I search for clues in his upbringing that hint at his future stardom. He says there are none. “I was like a kind of nerdy Jewish kid in the Midwest . . . So technology was just not a thing. Like being into computers was sort of, like, unusual. And I certainly never could have imagined that I would have ended up working on this technology in such a way. I still feel sort of surreal that that happened.”

The eldest of the four children of a dermatologist mother and a father who worked in real estate, Altman read a lot of science-fiction books, watched Star Trek and liked computers. In 2005, he dropped out of Stanford University before graduating to launch a social networking start-up. In those days, AI was still in its infancy: “We could show a system a thousand images of cats, and a thousand images of dogs, and then it [the AI] could correctly classify them, and that was, like, you were living the high life.”

Soon, Altman was running Y Combinator, a start-up accelerator that had backed his first venture. He was still there when he started OpenAI in 2015 as a non-profit with a mission that artificial general intelligence should benefit all of humanity. Musk was a co-founder who financed it with tens of millions of dollars but then fell out with Altman and left its board in 2018 in one of Silicon Valley’s most closely watched feuds. Musk, who has been growing his own AI rival company, xAI, alleges in a lawsuit that Altman had strayed from the company’s founding mission. Altman has countersued: “It seems clear to me why he’s doing all of this,” he says of Musk. “Because he’s trying to slow down a competitor and he doesn’t like that he’s like not winning in AI.”

Musk may have his personal motives but the debate over how to “win” in AI — which requires massive computing power and investment — without loosening commitment to safety, has long divided OpenAI. The splits exploded into the open in November 2023, when the non-profit board suddenly fired Altman, with one board member later accusing him of misrepresenting information and in some cases lying to the board.

Altman prevailed. He was reinstated within days, after nearly all employees threatened to resign and Microsoft, then the company’s largest financial backer, offered to hire Altman and his team. “It was very painful and very embarrassing that this whole thing happened, and no one, including me, really knew all of it at the time. What I wanted was to go sit on a beach and recover but I had to just keep running the company and now clean up a gigantic mess.” That mess, he says, included customers and investors asking whether they could depend on the company.

What I wanted was to go sit on a beach and recover but I had to just keep running the company and now clean up a gigantic mess

The storm led to the departure of some of OpenAI’s best researchers and left lingering questions about Altman. But it also cemented his status as the company’s undisputed leader, with a new board that backs him.

His ambitions too have expanded: early this year, he starred in another headline-grabbing event, appearing at the White House with Donald Trump to announce a joint venture with Japan’s SoftBank that will raise hundreds of billions of dollars to develop AI infrastructure, including data centres.

But while he has shifted the narrative around OpenAI’s mission as its commercial potential has become more apparent, attempts to change the company structure to a more traditional for-profit business have met with resistance, from Musk as well as from AI experts who insist the company must remain under a non-profit board to fulfil its mission of developing technology to benefit all humanity.

I ask Altman whether he learnt from the attempted coup. One criticism of him is that he tells people what they want to hear, depending on what’s expedient. All he will admit to is that he does prefer to avoid conflict and he’s had to learn quickly how to run such a complex company. “In the last two years we have gone through a decade and half of a normal company’s growth.”

It’s a busy day at the farm. Altman’s mother is visiting, as are his in-laws. His husband and son, as well as a colleague, are in the house too. They come in and out of the kitchen. Altman lays the bowls of food on a table, we serve ourselves and go back to sit in the garden. The pasta is delicious, with just the right amount of spice, the carrots crunchy, and the salad tastes light and juicy.

As a chief disrupter who is hyperactive on social media and, by his own description, OpenAI’s “marketing division”, he generates a constant stream of news. Recently that has included a dispute with an estranged sister who has accused him of sexually abusing her when she was a child (the rest of the family has backed his denials and he says he feels both compassion and upset towards a sister who’s “had a hard time of it for a long time”).

Altman claims that being competitive is not one of his defining features — “Am I not an outlier in terms of competitiveness,” he asks aloud, “compared to other tech CEOs?” — yet he relishes talk of winning. He admits that he has entertained running for governor of California (not a presidential bid though, as some have claimed); his favourite way of describing the reach of ChatGPT is not 800mn users but “10 per cent of the world”.

But how much does the competitive race ultimately matter? While Silicon Valley has been sinking massive investment into AI, DeepSeek, a Chinese start-up, released a model this year developed on a limited budget. That suggested that AI models were becoming commoditised and the US technological edge over China was diminishing. Altman says there is an “asterisk” to the commoditisation narrative: “Most of these models will be commoditised. The frontier models I don’t think will be.” He is, of course, expecting to prevail in frontier models but also win in the commoditisation game, given how many users are already attached to ChatGPT.

And how will OpenAI deliver the returns on massive investment? Altman hints at his ultimate goal, but describes it as just one compelling idea: when a subscription to ChatGPT becomes a personal AI, through which users log into other services. “You could just take your AI, which is gonna get to know you better over the course of your life, have your data in and be more personalised and you could use it anywhere. That would be a very cool platform to offer.”

The sun is too strong so we go back inside. Altman is sipping his tea, curled up on the living room sofa, his arms wrapped around his legs. We talk about the AI-dominated future his son will inherit. Diseases may be more rapidly cured by AI, and sectors from education to banking transformed. But it is a world that also raises existential questions about the way we live. Why should society trust a handful of AI men to decide on the shape of the future? In a response unlikely to convince, he says those developing the technology are “committed to meeting the gravity of the moment with responsible technology”.

AI progress is moving at such breathtaking speed that some experts favour slowing down until internationally agreed norms and regulations are put in place. Two years ago, Altman himself signed a statement with others in the field cautioning that “mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war”.

Altman insists he hasn’t changed his mind and there will be moments when holding back may be required. For now, he seems satisfied with the rollout of tools for people to experiment with and assess the risks. “The world needs to know about it [AI], the world needs to weigh in on it, very heavily. By having our users help us decide what the limits should be, like learning this collective value, function and preferences of humanity,” he says.

Some advances do scare him. After releasing a memory feature that allows the AI to register past behaviour, he has heard of cases where users become too emotionally dependent on the AI. “People are like, this is my new best friend, you can never delete this version, I need this thing . . . I have no doubt that we, society, will figure out how to navigate this, but that’s a new thing that’s just happened and you can imagine all sorts of ways that it goes really wrong.”

More alarming, I note, is a future in which AI agents communicate with each other without instruction by humans. Altman explains that perhaps it’s not an agent that creates other agents but an AI system that is so good, so trusted, that it in effect controls what humans do. “It [the AI model] becomes just better than we sort of have a conception for.” This sounds so spooky that even he seems alarmed by his words.

Altman doesn’t strike me as a man who entertains doubt but I ask how his grand plan of building an AI giant could go wrong. Is he confident that OpenAI will exist in 10 years? “Fixing fences and taking care of cows” would be his plan B, he jokes. More seriously, he says: “We could make a wrong research bet, you know, we could fall behind on product to somebody else. It’s like we’re doing a very complicated thing.”

We’ve been talking for more than two hours and his husband, holding the baby, joins us in the living room, and after some fussing, the tiny infant is falling asleep. I ask whether Altman finds his brave new world, in which humans are not the most intelligent thing on the planet, threatening — if not for him, then for his son?

He is, predictably, too enthralled by his AI creation to feel menace. “Do you think you’re smarter than o3 right now? I don’t . . . and I feel completely unbothered, and I bet you do too,” he says. “I’m hugging my baby, enjoying my tea. I’m gonna go do very exciting work all afternoon . . . I’ll be using o3 to do better work than I was able to do a month ago. I’ll go for a walk tonight. I think it’s great. I’m more capable. He [his son] will be more capable than any of us can imagine.”

Move would mark final chapter for one of the controversial metals magnate’s oldest companies

Sanjeev Gupta is set to call in administrators to place his main commodities trading business into insolvency, marking the final chapter for one of the controversial metals magnate’s oldest companies.

Liberty Commodities, which last month renamed itself to 3349135 Limited, on Thursday filed a “notice of intention to appoint an administrator”, according to UK court records.

Liberty Commodities once claimed to trade billions of dollars in metals a year and is one of the oldest companies in Gupta’s GFG Alliance conglomerate. It was established in 1997 and traces its roots to a commodities trading operation that Gupta ran out of a dormitory room at Cambridge university in the early 1990s.

The company has not filed audited annual accounts in nearly five years, however, making the current scale of its operations and assets hard to ascertain.

Gupta is being prosecuted over his alleged failure to file accounts for Liberty Commodities and more than 70 other companies. He is contesting the charges, having pleaded not guilty at a hearing in Cardiff last year.

Liberty Commodities was one of a number of Gupta’s companies that borrowed billions of dollars through Greensill Capital, which collapsed in 2021 in part due to its exposure to the metals magnate’s troubled businesses.

After Greensill’s collapse, numerous parties named on invoices issued by Liberty Commodities denied having done business with the firm. Gupta has previously denied any wrongdoing and his GFG Alliance group has co-operated with a long-running Serious Fraud Office probe into its finances.

A person familiar with the Liberty Commodities’ operations said it had not traded with third parties for “several years”. They added that GFG was “proactively” pursuing the administration as part of a wider debt restructuring.

In recent years, Liberty Commodities has previously fended off attempts to wind its business up from investors in Greensill’s invoice-backed debt deals, such as now-defunct Swiss bank Credit Suisse and US investment firm White Oak.

Gupta stepped down as a director of Liberty Commodities in July last year. He was replaced by Kenneth Tointon, a 76-year-old semi-retired accountant who has helped prepare financial statements for a number of Gupta’s businesses in the past year.

Liberty Commodities declined to comment.