• As Starbucks continues its “get back to Starbucks” plan to revive slumping sales, the company announced it will implement an OpenAI-powered chatbot to remind baristas of drink recipes and assist them with equipment troubleshooting. Analysts told Fortune the move could help streamline hiring and efficiency, but it also carries with it the pitfalls of AI, including the potential for hallucinations and outages. 

Starbucks is betting on AI to give its baristas some extra help behind the counter.

The Seattle-based coffee chain announced Tuesday the launch of “Green Dot Assist,” an AI-powered virtual assistant intended to simplify baristas’ jobs and fulfill orders faster. Starbucks will pilot the technology created with Microsoft Azure’s OpenAI platform at 35 locations and will roll it out nationwide next year.

The AI assistant will pull recipe cards of drinks to show baristas how to make them, as well as suggesting swaps if ingredients run out, the company said. The tech will also suggest food pairings to suggest to customers, provide troubleshooting support for malfunctioning equipment, and help managers find employees to backfill shifts should a store be short-staffed.

“It’s just another example of how innovation technology is coming into service of our partners and making sure that we’re doing all we can to simplify the operations, make their jobs just a little bit easier—maybe a little bit more fun—so that they can do what they do best,” Starbucks chief technology officer Deb Hall Lefevre told CNBC. 

Starbucks first announced the tech at its Leadership Experience event on Tuesday, when it also unveiled plans to expand the position of assistant manager by adding the role to “most company-operated stores in the U.S,” hiring about 90% of the new management internally.

The swath of labor changes are the latest in CEO Brian Niccol’s efforts for the company to “get back to Starbucks” and revive its cozy-coffeehouse reputation amid slumping sales. The company reported in April its fourth straight quarter of same-store sales declines, in part a result of economic uncertainty putting a damper on demand.

As part of the turnaround efforts, Starbucks will have to draw on its big brand name and past goodwill from customers to refocus on what made the chain popular to begin with.

“All brands drift over time, and I have pattern recognition,” Starbucks CFO Cathy Smith told Fortune in April. “I’ve seen this with a number of brands, and the great ones recapture what made them great.” 

AI behind the counter

The move follows the lead of other restaurant chains deploying AI. Yum! Brands, the conglomerate behind KFC and Taco Bell, has partnered with Nvidia to take drive-thru and digital orders. McDonald’s, however, cancelled its contract with IBM after two years and returned humans to drive-thru order-taking.

While restaurants have had mixed results with AI, analysts see Starbucks’ recent moves to leverage the technology as largely positive, so long as the company uses it effectively.

Logan Reich, an analyst at RBC Capital, told Fortune that while the introduction of an AI chatbot won’t be instrumental in increasing revenue, it can help train and onboard staff more efficiently, particularly as the company invests in internal promotions and giving employees more hours. Announcing new management opportunities alongside implementation of AI tools also sends the signal to workers that AI won’t be taking their jobs anytimes soon, according to Gadjo Sevilla, a senior AI and tech analyst at eMarketer.

“What they’re trying to show here is that, with regard to adoption, is that they can make it work with longtime staff,” Sevilla told Fortune. “So it’s not replacing jobs, it’s enhancing jobs, with regards to the new hires.”

But as with any rollout including AI, Starbucks may experience hiccups like hallucinations.

“Making sure that the chatbot is accurate and providing in an accurate way and not causing more issues—I think that’s going to be a critical aspect of rolling out to a broad storebase,” Reich said.

Sevilla warned the tech may experience more profound problems, from security breaches to outages—like the one ChatGPT experienced Tuesday—that are associated with a company using tools outside its immediate premises. As more restaurants figure out how to integrate AI into their point of sale, they may look to see how effective Starbucks was in leveraging the tech.

 “This is going to be a litmus test for AI integration at this scale,” Sevilla said.

This story was originally featured on Fortune.com

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• As more Waymos and self-driving Teslas hit U.S. roads, insurance companies must reassess how to cover these autonomous vehicles. Goldman Sachs predicts insurance costs will be cut in half as there’s fewer human-caused accidents. But liability may switch to car manufacturers, whose tech may malfunction or experience security breaches.

More autonomous vehicles are hitting the road, and it’s leading to a reassessment of insurance costs and coverage, as well as who is to blame for fender-benders and crashes. The $432 billion insurance industry must adapt to more self-driving cars ostensibly leading to fewer human-caused accidents, according to a Goldman Sachs analyst note sent to investors on Monday.

“Autonomy has the potential to significantly reduce accident frequency longer-term and reshape the underlying claim cost distribution and legal liability for accidents,” analyst Mark Delaney and colleagues said in the note.

Tech companies are already pouring money into self-driving tech investment. Alphabet has raised $11 billion in funding for Waymo, including $5.6 billion in its latest funding round in October 2024. Tesla CEO Elon Musk said in May he expects his autonomous robotaxis to drive on the streets of Austin, Texas, this month.

Goldman Sachs estimates the rideshare market of autonomous vehicles will reach $7 billion— about 8% of the market—by 2030, while trucks with virtual drivers will grow to a $5 billion industry in the same time frame. While there may be increased ubiquity of self-driving cars as rideshare vehicles, Goldman Sachs does not expect to see a significant increase in autonomous vehicles as personal cars in the near future, but said it expects costs associated with the vehicle to fall.

Early evidence suggests the technology is effective at improving road safety by mitigating crashes, potentially contributing to lower insurance costs. A December 2024 study from insurance company Swiss Re commissioned by Waymo found in a liability claims analysis a 92% reduction in bodily injury claims and 88% reduction in property damage claims compared to human-operated cars.

Goldman Sachs predicts insurance costs will decrease more than 50% over the next 15 years, from around $0.50 per mile in 2025 to $0.23 in 2040.

But Scott Holeman, director of media relations at the Insurance Information Institute, warns that just because insurance costs are cut doesn’t mean consumers will be padding their wallets.

“While there could be lower cost on insurance products, this technology costs money, so there’s a shift in where you pay the money,” Holeman told Fortune.

Who’s behind the wheel?

Because of the potential for fewer accidents, Goldman Sachs predicts auto insurance will shift insurance products to being more focused on severity of an accident and less about accident frequency. The shift also raises questions of who is liable for accidents.

“It’s possible that the legal liability of accidents may shift, potentially changing the underlying claim costs distributions between physical damage and liability coverages as well,” the note said.

Analysts suggested an increased focus from the insurance pool on product liability and cyber coverage. Instead of human error causing most car accidents, technology woes may be responsible for crashes as a result of data or security breaches. That shifts the onus from the driver to the manufacturer or technology company partnering with the manufacturer.

“There’s more and more concern for cyber threats or security risks that someone could manipulate vehicles—bad actors,” Holeman said.

Though automated technologies appear to reduce accidents, they are still not perfect, and accidents could also be caused by technological shortcomings. In October 2024, the National Highway Traffic Safety Administration (NHTSA) opened up a probe on Tesla after the EV company reported four accidents caused by Tesla’s “Full Self-Driving” system coming into contact with sun glare, fog, and airborne dust.

The vehicles still face differing levels of regulation, depending on the state in which they operate. Transportation Secretary Sean Duffy announced in April intentions to create federal standards for autonomous vehicles.

Waymo has offered some indication of what the future of insurance would look like with more of its cars on the road. Tilia Gode, Waymo’s head of risk and insurance, told MarketWatch last year the company’s insurance for its Level-4 vehicles—those that are self-driving, but only in designated areas—are similar to a taxi company’s model of fleet insurance where vehicles are insured as a group, not individually.

“Just like any commercial entity, we have insurance coverage in place that covers the Waymo driver over the course of the driving task,” Gode said. “Essentially, there’s a shift from human being drivers to the autonomous system being the driver—Waymo is the driver.”

This story was originally featured on Fortune.com

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• Senate Republicans are proposing the elimination of penalties for not abiding by certain fuel efficiency standards. These penalties would render regulatory credits, an incentive for auto companies to abide by the standards, essentially useless. Tesla relies on these credits for a chunk of its revenue, racking up $2.67 billion from them in 2024.

As Tesla stock sputters following CEO Elon Musk’s feud with President Donald Trump, the EV maker is facing yet another threat from the administration. Republicans are doubling down on efforts to weaken carbon emission standards for the auto industry, which have provided opportunities for companies producing eco-friendly vehicles, such as Tesla, to receive and sell regulatory credits for profit.

The Senate Committee on Commerce, Science, and Transportation proposed last week eliminating penalties for companies not meeting certain economy fuel standards set to mitigate carbon emissions. The proposal is included in the committee’s portion of Trump’s sweeping budget bill. 

After Corporate Average Fuel Economy (CAFE) standards were introduced in 1975 as a means of setting standards for fuel efficiency, a credits program emerged following lobbying efforts from auto companies looking to be paid to produce lower emission vehicles. Auto companies that produce a certain amount of energy-efficient cars are given a number of credits, depending on how eco-friendly their manufactured vehicles are. Companies are required to have a certain number of credits annually.

While Tesla is able to easily attain these credits as a producer of cars that don’t run on gas, other manufacturers, like Ford and Stellantis, are not. Therefore, they buy credits from Tesla, who can sell those credits for practically 100% profit. 

The Senate committee’s proposal would eliminate certain CAFE penalties, rendering the need to have credits useless, Chris Harto, senior policy analyst at Consumer Reports, told Fortune in an email. 

“It also would essentially turn the CAFE standards into nothing more than a reporting requirement with no consequences for automakers who fail to improve the efficiency of the vehicles they sell,” he said.

The committee argued the provision would “modestly” bring down the cost of cars by eliminating CAFE penalties.

These CAFE credits have been a boon for Tesla, which has been battered by CEO Musk’s controversial involvement in—and departure from—the Trump administration. The EV-maker made $2.76 billion from regulatory credits in fiscal 2024 and $595 million in the first quarter of 2025, according to earnings reports. Tesla reported $420 million in net income the same quarter, meaning without the regulatory credit, the company would not have been profitable.

“A key element of Tesla’s profitability has been its ability to generate credits because it makes zero emissions, and sell those credits to more polluting car companies like GM and Ford and Stellantis—primarily gas-guzzlers that don’t really want to make clean cars,” Dan Becker, director of the Safe Climate Transport Campaign at the Center for Biological Diversity, told Fortune.

“By taking away these credits, they’re taking away a key element of Tesla’s profitability,” he added.

Tesla did not respond to Fortune’s request for comment.

Tesla’s credit headaches

The Senate committee’s proposal is one of several efforts by the Trump administration to cut auto sustainability standards. Last month the Senate passed legislation blocking a California effort to ban gas-powered vehicles and mandate sales of only zero-emission cars and light trucks by 2035. The bill, should it be signed by the president, would take a $2 billion bite out of Tesla’s revenue, according to JPMorgan analysts.

Also in Trump’s massive budget bill is the elimination at the end of this year of tax credits up to $7,500 for buyers of certain Tesla and other EV models, which would cost $1.2 billion of Tesla’s full-year profit, the analysts calculated. 

Tesla’s credit headaches extend across the Atlantic Ocean. Regulatory credits are common in Europe and Asia, and the European Union, for example, gives credits to European automakers who sell a certain number of zero-emission cars.

But as Tesla sales crater overseas—including falling by 49% in April—the EV maker may not be able to reach the number of sales necessary to gain credits. As of April, Tesla—grouped with Ford and Stellantis in a manufacturing pool to achieve the EU’s emission standards—are still short of the target, according to a report from the International Council on Clean Transportation. Poor sales could jeopardize Tesla’s ability to rack up credits.

“If things go bad for Tesla and they don’t sell enough cars this year, they might not have enough credits for what they promised Stellantis and the others,” ICCT managing director Peter Mock told Politico in March. “Tesla is under pressure.”

This story was originally featured on Fortune.com

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