There’s a little bit of “What goes around comes around” behind Europe’s latest industrial policy initiative.

The Financial Times reported on Tuesday that the European Union is drawing up a plan to make Chinese companies fork over intellectual property in exchange for EU subsidies, citing two anonymous senior EU officials. The plans will initially apply to Chinese companies that want to build battery factories in the EU, and are a carrot to the stick that is tariffs, which are looming ever-greater over China’s manufacturing industry with the imminent re-ascension of President Donald Trump in the US. They also mimic a policy Beijing has used to great effect to buoy economic development. 

Flat Battery

While Trump is planning to up the ante on China tariffs, there is already a European appetite for imposing levies on Chinese goods related to the green energy transition, like electric vehicles. Despite this, China has poured billions in foreign direct investment into EU nation Hungary to develop EV battery plants. Per the FT, the EU is going to solicit bids totalling €1 billion ($1.1 billion) for battery development next month, and it’s baking in provisions that companies must first have factories inside the EU and second, must share technical knowledge with the EU.

This mirrors China’s own domestic policy toward foreign firms, which has greatly benefitted a host of homegrown industries ranging from aviation to solar panels. And it comes at a time when Europe is struggling with battery development itself:

• Sweden-based Northvolt, the poster-child for EU battery firms, is perilously close to going bankrupt and is struggling to hit production targets, according to a recent Reuters report.
• Some European battery companies are already looking for strategic alliances with Chinese firms. “It’s really important for us to move fast in the battery space, and in doing that, you can’t avoid working closely with China the way things are right now,” Arne Fredrik Lånke, CEO of Norwegian battery-maker Elinor Batteries, told tech publication Sifted.

State of the Union: The EU will have a geopolitical tightrope to walk if and when the incoming US president re-ignites his trade war with China, and officials are already bracing themselves for the possibility of Trump tariffs on their own wares, Politico reported last week. Everett Eissenstat, who was an international economics official in the first Trump administration, told Politico he believes Trump is likely to focus his attention on pressuring individual member states to redress what he views as trade imbalances. “I think there’ll be less support for talking to the EU as the EU,” Eissenstat said.

Will generative artificial intelligence’s star be added to the Hollywood Walk of Fame? 

Media investor Peter Chernin’s North Road and Silicon Valley VC titan Andreessen Horowitz think so. They’re backing a new startup production studio, Promise, that will use the technology to make films and television and pioneer “new formats,” the firm announced Tuesday.

Fusing Finance and Fiction

McKinsey analysts estimated last year that Generative AI could deliver some $80 billion to $130 billion in value to the media and entertainment industry, worth 1.8% to 3.1% of sector revenues. A lot of that value would come in obvious places like marketing and sales, where promotional materials or customer service can be — and already are, in some cases — automated by AI.

But, as it has become more sophisticated, Generative AI has begun manifesting in mainstream Hollywood productions, too. In July, “John Wick” and “Knives Out” studio Lionsgate agreed to let AI startup Runway have access to its library of content in exchange for a custom AI model to be used in film production and editing. Earlier this month, Disney set up a unit to oversee AI adoption. The logical evolution is a studio dedicated to Generative AI, which Promise plans to make good on:

• CEO George Strompolos founded network Fullscreen, COO Jamie Byrne is a former YouTube executive who helped start its creator revenue-sharing program, and chief creative officer Dave Clark is a commercial director who dabbles in AI-filmmaking himself, notably a five-minute short, Battalion, that portrays the only African American US Army unit involved in the D-Day invasion.
• “In my experience, as big companies dabble in things, it’s not the best road to success,” Chernin told The Wall Street Journal, explaining his decision to invest. “It’s likely better done in a separate company that is 100% focused.”

Let’s Ask Batman: Not everyone in Hollywood believes Generative AI is capable of making full productions. “What AI is going to do is disintermediate the more laborious, less creative and more costly aspects of film — that will allow costs to be brought down,” Ben Affleck, the actor and filmmaker who co-owns production company Artists Equity, said at a panel last week. “I wouldn’t like to be in the visual effects business; they’re in trouble because what cost a lot of money is now going to cost a lot less. But it’s not going to replace human beings making films.”

Walmart is cleaning up, and we’re not talking about aisle spills.

During its third-quarter earnings call on Tuesday, the big box retail giant announced that it’s raising its outlook for the year, thanks in part to a rocking start to the holiday shopping season. Still, the optimism comes with more than a few caveats — the types that paint a pretty clear picture about the state of the economy.

Thanksgiving Comes Early

The holiday season is literally shorter this year (Thanksgiving is later than usual, meaning there are five fewer days between then and Christmas than usual). Walmart, unsurprisingly, had a plan, kicking off holiday shopping discounts a few weeks earlier than usual. On its call with analysts, Walmart said it was enough to build some momentum heading into the final frame of the year — giving it reason to bump annual net sales growth guidance up from 3.75% to 4.75% to a range of 4.8% to 5.1%. Shares of Walmart jumped 3% on the news.

Still, American consumers largely remain wary. The third-quarter brought a slowdown in growth of the number of transactions, even as Walmart competes in an industry-wide race to appeal to price-conscious customers. In the meantime, Walmart’s positive quarter was driven in part by increasingly catering to a very specific (read: comfortable) kind of shopper:

• While total transactions were down, the value of individual transactions rose in the quarter. Walmart said that was because shoppers from households with annual incomes of at least $100,000 are increasingly flocking to its stores.
• Meanwhile, the e-commerce unit’s streak of $2 billion in monthly store-based deliveries stretched to a twelfth month, with customers paying a premium on 30% of purchases to get them more quickly.

Overall, consolidated revenue rose to nearly $170 billion, up 5.5% year-over-year, while global operating income spiked more than 8% year-over-year to $6.7 billion.

Get Lowe: Lowe’s, which also reported its latest earnings results Tuesday, didn’t have it quite so easy. The quarter marked the eighth straight period of declining sales as inflation — and high interest rates — prompted consumers to put off big spending on home projects. Shares were down almost 5%. Target’s results, posted on Wednesday, failed to live up to Wall Street’s expectations, precipitating a 20% drop in its share price in pre-market trading.