Author: CNBC Online news

CarMax is Morgan Stanley’s top pick among US auto dealer stocks

Bloomberg | Getty Images

CarMax shares are poised to break out because of the company's opportunity to capture more of the used car market, according to Morgan Stanley.

The firm bumped CarMax to the number one spot on its rankings of U.S. auto dealers and reiterated its overweight rating for CarMax stock.

“We see [CarMax] as a best in class operator with an opportunity to grow market share,” Armintas Sinkevicius said in a note to clients Wednesday. The analyst also said the company's upcoming results will compare more favorably to prior quarters.

Ford is using drones to keep an eye on its UK factories — and save money

Drones are making Ford's factories safer and more efficient
11:53 AM ET Fri, 31 Aug 2018 | 01:05

There is a new sight buzzing around a Ford engine factory in London: drones.

The second-largest U.S. automaker is now using drones to perform key inspections in difficult-to-reach places around the Dagenham Engine Plant. The unconventional move saves Ford considerable time and money and brings several other advantages, executives say.

In the past, plant managers used to have to shut down the factory at least once a year to perform risky and time-consuming inspections on high-up structures, parts of the factory's roof and other hard-to-reach places. The drones allow the Michigan-based automaker to conduct safety inspections without shutting down production.

The drones also give Ford a more objective plant maintenance record, preventing arguments over the diagnosis and possible solutions to problems, said Pat Manning, a machine production manager for the EcoBlue diesel engine at the plant, where it's code named Panther.

“The video images are fantastic and are a great tool for us,” Manning said.

One of the most common inspections involves overhead structures known as gantries. These are long linear frames suspended near the roof and support a track that shuttles a robotic arm around the plant. The arms on these tracks are what pick up parts in one place and feed them into the machines along the factory floor.

Source: Ford
A drone inspecting a gantry at the Ford Dagenham plant.

There are around 200 gantries in this plant, and they need to be inspected to ensure they don't break down or break loose and fall onto the floor, equipment or people.

The plant has typically done inspections during a three-week shutdown in the summer. On each of the plant's four machine lines, a team of up to six people would roll in motorized lifts and build scaffolds to reach the gantries.

The factory had been looking for a way to make the process more efficient, and one worker joked they ought to mount a remote control car onto the track with a camera attached that could zip back and forth and take footage.

Then someone suggested a drone.

The factory worked with some local companies to develop a custom drone mounted with several cameras, including a thermal imaging camera that can sense heat, a wide-angle lens and a close-up lens. It can take video or still images.

The drone allows a team of two do what had taken almost two-dozen people to do, and the amount of time it takes to inspect a single 120-foot gantry was reduced from 12 hours to 12 minutes. The plant doesn't need to shut down production either, and it allows for more frequent inspections.

It also eliminates the risk of having to scale 150 feet to inspect the gantries.

The drones can also monitor machines and power cable temperatures as well as inspect robots, overhead conveyor belts, cranes, hoists and the roof for leaks.

The team is also exploring the possibility of using the drones for drain and sewer inspections as well as emergency lighting.

Source: Ford
A plant worker using a drone at the Ford Dagenham factory in London, England.

The video and still footage the cameras take have other advantages. They can be stored, allowing the plant to compare images over time and observe changes or patterns.

Car shoppers could snag fat discounts during Labor Day sales push

Anyone thinking about a new car might want to plan a trip to the showroom over this three-day holiday weekend.

The combination of softening sales and dealers' annual Labor Day sales to make room for next year's models is expected to put consumers in the driver's seat when it comes to snagging good buys on a various makes and models.

“We're seeing some pretty fat discounts on some pretty cool cars,” said Matt Jones, senior consumer advice editor at Edmunds.com, an online automotive research guide. “Sometimes, in the past, we've seen them only on certain segments, but this time it looks like they're fairly spread across the board.”

Ty Wright | Bloomberg | Getty Images
A customer browses through rows of cars for sale at the Jack Maxton Chevrolet dealership in Columbus, Ohio, U.S.

U.S. consumers spent an estimated $86.5 billion on new vehicles in July, about $2 billion less than in July 2017, according to research firm J.D. Power. And although the latest estimates show that the average manufacturer incentive decreased to $3,665 in July — down $204 from last July's $3,869 — the forecast also noted higher discounts were likely soon on their way.

Indeed, some of the current discounts are far above that estimated July average. For example, for the popular Chevrolet Silverado 1500 crew cab, which has a sticker price ranging from about $40,000 to $56,000, some dealers are offering discounts of $12,000 to $15,000 or more.

“That's a big amount of money for a vehicle like this,” Jones said. He added that the savings are available because a 2019 model is coming out, which pushes the value of the existing version down.

Despite trade deal, auto industry is a long way from a resolution, says Consumer Edge Research auto analyst
3:44 PM ET Tue, 28 Aug 2018 | 01:38

Generally speaking, though, it's best not to focus only on the dollar amount of the discount, Jones said.

“That amount can be eye-popping,” he said. “But you have to put it in the context of the price.”

For illustration purposes: While $5,000 off of a $30,000 car is close to a 17 percent discount, that same amount applied to a $20,000 car is a 25 percent discount.

It's worth noting that if your need for a car isn't pressing and price matters most, you might find deeper discounts later in the year. However, the selection of cars that come with special pricing will be more limited, Jones said.

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Additionally, it remains uncertain how trade wars between the United States and other nations will end up affecting car prices. So far, threats from President Trump to impose additional tariffs on imported autos has not materialized.

If you do plan to head to the dealership, here's how to prepare for your trip.

Compare prices in advance

If you know what make and model you're interested in, do some research before showing up at the showroom. There can be differences in pricing and incentives among your local dealerships.

“Each dealership is individually owned,” Jones said. “The manufacturer might be running a special and that's great, but there might be other deals at the dealership level.”

Get pre-approved financing

Unless you plan to pay for your new car with cash, it's smart to get pre-approved for a loan from a bank or credit union. While there's no obligation to use the pre-approval, you'll at least be armed with a comparison when the dealership offers its best loan terms.

“If what a dealer can offer beats your pre-approval, then great,” said Jones. “If not, you still have the pre-approved loan with the better interest rate.”

Gather your paperwork

Before you head to dealership, be sure to gather the information you might need to do a transaction, such as your license, proof of insurance and down payment.

Automakers breathe a sigh of relief at Trump’s approach to renegotiating NAFTA

STR | AFP | Getty Images
General Motors Buick cars being assembled at Wuhan auto plant in Wuhan, China.

As the Trump administration sought trade concessions from Mexico in recent weeks, automakers and their suppliers feared that manufacturing costs could increase by billions of dollars. Now, they are breathing a sigh of relief.

The auto industry is still waiting to learn details of the preliminary agreement that President Trump and Mexican leaders announced this week and whether Canada will join the deal. Car companies are also watching to see if anything will come of a European Union proposal to eliminate tariffs on vehicles and other industrial goods if the United States agrees to do the same. Mr. Trump on Thursday told Bloomberg News that offer was ''not good enough.''

But analysts and consultants say most companies would be able to comply with the conditions in the agreement with Mexico that have been disclosed so far. Many of the changes that automakers would have to make — like hiring more workers in the United States — were in their plans anyway. But other changes, like requiring automakers to use more parts made in North America and an agreement to cap imports from Mexico, could raise costs and hurt some companies.

Companies ''are glad they now have some certainty on what the new requirements are,'' said Mark Wakefield, global co-head of the industry and automotive practice at AlixPartners, a consulting firm. ''Now they can plan around them and go forward.''

The preliminary deal would require that at least 75 percent of an automobile's value be produced in North America in order for a company to import it into the United States duty free. That is up from 62.5 percent under the North American Free Trade Agreement, the 1993 deal that Mr. Trump has called the ''worst trade deal ever made.''

Automakers would also have to use more local steel, aluminum, glass and other parts. In addition, 40 to 45 percent of vehicles would have to be made by workers earning at least $16 an hour — a provision meant to preserve and create jobs in the United States and Canada, where wages are much higher than in Mexico.

These terms would force automakers to buy more parts made in the United States — and possibly Canada. That should modestly increase employment at suppliers like Delphi Technologies and Johnson Controls, analysts said.

''The main takeaway so far is there is no giant influx of jobs coming into the U.S.,'' said Kristin Dziczek, vice president for industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich.

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White House Gives Canada More Time to Rework Nafta

'A solution in search of a problem'

The auto industry has been adding jobs in the United States for several years. In July, more than 972,000 people worked for car and parts companies, 40,000 more than a year earlier, according to the Bureau of Labor Statistics. Manufacturers have added more than 300,000 jobs since 2009, when General Motors and Chrysler needed a government bailout to survive.

And while a half-dozen auto plants have been built in Mexico in the last decade, new plants are going up in the United States, too. Volvo, the Swedish carmaker, is building a factory in South Carolina that the company says will employ 4,000 people by 2021. Toyota and Mazda recently agreed to jointly build a plant in Alabama.

''In some ways,'' said Charlie Chesbrough, a senior economist at Cox Automotive, the new trade rules amount to ''a solution in search of a problem.''

But some industry associations are not as sanguine. The Motor and Equipment Manufacturers Association, which represents parts makers, is worried about a side agreement that the Trump administration reached with Mexico that could be used to cap duty-free auto imports from that country in the future.

That side deal ''may serve to decrease American manufacturing jobs and exports and put U.S. businesses at a global disadvantage — all while increasing costs to consumers,'' the association said in a statement.

The Mexican government has said about 30 percent of the cars now exported to the United States do not meet the requirements of the new agreement. They include popular compact models like the Honda HR-V, the Volkswagen Jetta and Golf, the Nissan Sentra, and the Ford Fiesta and Fusion.

If manufacturers can't find enough North American parts for those Mexican-made cars, they could still import them into the United States by paying a 2.5 percent tariff. That would force companies to either raise prices or accept smaller profit margins, or some combination of the two.

Another option is to stop selling those noncompliant vehicles in the United States. Some small cars are already set to go away.

With American consumers flocking to roomier sport utility vehicles, Ford will stop selling the Fiesta, the Fusion and other sedans in its home market. On Friday, the company said it would also cancel plans to import a Focus crossover from China because the Trump administration was considering imposing tariffs on an additional $200 billion of imports from that country. The president has also said he wants to place a 25 percent duty on cars and car parts.

Other companies might not have that choice. Although sales of the Jetta and the Golf have fallen about 40 percent this year, they are two of Volkswagen's top-selling models in the United States. Honda has a lot riding on the HR-V, which is built in an $880 million plant in Mexico that opened in 2014.

''The HR-V is doing really well for us,'' said Adam Silverleib, vice president of Silko Honda, a dealership in Raynham, Mass. Losing the model ''would definitely hurt.''

Some companies could find it harder to meet fuel-economy standards if they got rid of smaller cars. The Trump administration is trying to roll back those standards, though court challenges could prevent a resolution of the issue for years.

While fears about the scrapping of Nafta have eased somewhat, automakers are still concerned about Mr. Trump's plans for higher tariffs on cars and car parts. The president has argued that auto imports pose a threat to national security, a rationale he used to raise tariffs on steel and aluminum imports.

Ms. Dziczek of the Center for Automotive Research said those higher tariffs would significantly increase costs and would thus be much more damaging than the terms of the preliminary agreement with Mexico. Even vehicles made in the United States would be affected because many include imported parts.

Her firm estimates that a 25 percent tariff on imported cars — excluding those made in Mexico and Canada — would increase prices of vehicles made in North America by $1,135; imported models would cost $3,980 more.

As a result, the center estimates, annual auto sales would fall by 1.2 million vehicles and the industry would lose 197,000 jobs.

F

—

It’s getting harder to find those zero-percent financing deals on new cars

Daniel Acker | Bloomberg | Getty Images
A General Motors dealership in La Salle, Illinois.

With inventories in a more healthy place and nationwide interest rates ticking up, a report from Edmunds shows that zero-percent finance deals accounted for the smallest portion of July auto sales in over 10 years.

The report shows these deals accounted for just 6.92 percent of new car deals in July. That's a significant drop off from last year's 11.34 percent, or 11.18 percent 5 years ago, representing the lowest proportion of deals since 2005.

“It's definitely much less pervasive than it's been in the past,” Jeremy Acevedo, Edmunds' manager of industry analysis, told CNBC. “We're seeing levels that are a little more than half of what they were last July.”

Automakers have a good inventory mix of in-demand vehicles that don't require heavy incentives to sell, Acevedo said. You can still get zero-percent deals on less desirable vehicles — sedans in particular — but the automakers aren't as weighed down with previous-model-year vehicles this year.

Additionally, zero-percent finance deals are becoming a less cost-effective way for automakers to drive deals. General Motors, which popularized the concept with their post-9/11 “Keep America Rolling” zero-percent financing, has been less aggressive with the practice this year.

“That's partly a function of rising interest rates, which makes it a little more expensive,” GM spokesman Jim Cain said.

It's still pretty widely used in the industry, but GM likes to keep a mix of different incentives in the industry, he said.

“The way we try to approach things is to make sure we have competitive lease deals, especially in markets like the Northeast and California where leasing is really possible,” Cain said. “And we have a simple and compelling message that's easy for our dealers to advertise and cuts through the clutter.”

For people looking to buy rather than lease, Cain says the company is focusing on direct discounts that make sense to the customer. Rather than differing interest rates for different terms and buyers, it's easier to effectively market a 10 percent discount.

“It's clear and compelling,” Cain said. “It's familiar, because that's how other retailers typically have their sales promotions.”

And while it's been a major part of the summer sell down for all three major American automakers since 2005, Acevedo isn't optimistic that zero-percent financing offers will be commonplace in the future.

“It doesn't look like APRs are going down any time soon,” he said. According to the report, the average annual percentage rate, or APR, in July was 5.74 percent, compared with 4.77 percent a year ago. Overall, interest rates are near their nine-year high.

Some automakers —Subaru, Mazda, Cadillac, and Lincoln were the ones Acevedo specifically noted — are making more interest-free deals than others. But if automakers can offload their 2018 inventories without having to offer zero-interest loans, Acevedo expects that to signal the end of widespread availability of these loans.

That, combined with ever-increasing APRs and epic term lengths, means Americans will likely continue to spend a rising proportion of their car budgets on financing alone. To Acevedo, that may spell long-term trouble for the automotive market.

“It definitely, to us, signals some caution lights to be aware of what's happening ahead,” he said.

Moody’s downgrades Ford’s credit rating to one notch above junk bond status

Andrew Harrer | Bloomberg | Getty Images
Jim Hackett, president and chief executive officer of Ford Motor Co., center, speaks to members of the media at an event during the 2018 North American International Auto Show (NAIAS) in Detroit, Jan. 14, 2018.

Moody's downgraded Ford's credit rating to one notch above junk bond status Wednesday and warned that it could be further cut as the Detroit automaker struggles overseas and invests an estimated $11 billion on a turnaround plan.

The second largest U.S. auto manufacturer is facing weakening profit margins in North America, a retrenching business in China and losses in South America and Europe, at least some of which could continue to worsen, Moody's said in a research note.

The investments are necessary, but it will take several years before that translates to better performance, Moody's said.

“Success could be challenged by having to address the serious performance problems in multiple business units simultaneously,” Moody's said, adding that it was keeping a negative outlook on its credit rating “primarily based on the difficult changes the automaker will have to make.”

Moody's said the company's debt rating could be cut even further, to non-investment grade, by the middle of next year if it doesn't make “clear progress” on its turnaround plan.

Since CEO Jim Hackett took the reins in 2017, investors have at times shown impatience with what they have said is a lack of clarity on how Ford will improve its businesses and bolster its share price. At the same time Ford under Hackett has made some bold moves, such as choosing to all but stop making traditional passenger cars for the U.S. market.

China is a particular concern in the near-term, the report said. Ford has to retake lost market share while competing with a growing swarm of both Chinese automakers and other foreign firms.

Ford's plan to improve what Hackett has called its “operational fitness” could entail $11 billion in charges, including $7 billion in cash expenditures over the next 3-5 years. Moody's said Ford' decision to leave the North American car business as a positive for Ford's credit, since it reflects Ford's willingness to make aggressive and disciplined choices about where it puts capital, the report said. But it will take years to see the benefits of the plan.

“What we are looking for is very identifiable progress that the components of the company's restructuring and fitness plan are taking hold and yielding results,” said Bruce Clark, senior vice president of Moody's corporate finance group.

Despite Ford's challenges, it has a lot of strengths. Ford is competitive and profitable in North America, and the automaker's fitness plan is tackling areas where Ford is weakest. Ford has also chosen to rework its business while auto sales are still healthy.

“Since coming through the Great Recession, Ford Motor Company has delivered year after year of solid financial results and operating cash flows,” Ford said in a statement. “The company has a strong balance sheet, which provides financial flexibility. We know we can capitalize on our strengths, bolster underperforming products and regions and disposition where we cannot make an appropriate return.”

Elon Musk suspected sabotage when Tesla factory robots stopped working earlier this month

Joshua Lott | Getty Images
Engineer and tech entrepreneur Elon Musk of The Boring Company talks about constructing a high speed transit tunnel at Block 37 during a news conference on June 14, 2018 in Chicago, Illinois.

Elon Musk was up early on Saturday. He departed Los Angeles, where he runs SpaceX, his private rocket venture, and flew north in his white Gulfstream jet. Stopping in Silicon Valley, he picked up two engineers from Tesla, his electric-car company. They flew on to Reno, Nev., where they spent the day at Tesla's battery plant, the Gigafactory.

It might have been just another workday for Mr. Musk — a multistate jaunt to personally fix a drive-unit production line. But this was no ordinary morning. He was a brief night's sleep removed from one of his most consequential decisions: scrapping his plan to take Tesla private.

It was an abrupt about-face, and it capped a tumultuous two and a half weeks that began with a single tweet and wound up roiling markets, setting off regulatory alarms and raising questions about his judgment. Even by Mr. Musk's standards — this is a C.E.O. who believes Tesla is under attack by saboteurs, has a personal life playing out in the gossip blogs and is prone to fiery outbursts on Twitter — it has been a time of high intrigue.

“The reason Elon seems to attract drama is that he is so transparent, so open, in a way that can come back to bite him,” said Kimbal Musk, Mr. Musk's younger brother and a Tesla board member. “He doesn't know how to do it differently. It's just who he is.”

Mr. Musk, a brilliant but erratic billionaire, is the animating force behind Tesla, responsible for everything from its push into renewable energy to the design of the air vents in its newest electric car. His singular role gives him extraordinary influence over the fate of Tesla, its more than 40,000 employees and its investors.

Associates, including several people inside the company interviewed over the past week, portray him as a workaholic who zeroes in on the smallest details. His deep involvement suggests that the company can't do without him. Yet these days, it's not always clear that he knows what's best for Tesla.

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Even before taking Tesla investors on a roller-coaster ride, Mr. Musk was increasingly unpredictable, marketing flamethrowers online and dispatching a submarine to assist in a rescue in Thailand, then calling a critic of the gesture a pedophile. In an interview this month with The New York Times, Mr. Musk said he was physically exhausted and emotionally drained, causing some to question his fitness for the job.

Mr. Musk's personal life is no less chaotic. He was dating Grimes, the Canadian pop musician, but the two stopped following each other on social media last week, leading gossip blogs to speculate they had broken up. That followed a bizarre run-in with the rapper Azealia Banks, who intimated that Mr. Musk had written his going-private tweet while on acid. (He denied it.) Amid the fallout, he took to Twitter, posting cryptic messages about love and quoting T. S. Eliot.

And at the office, he is hardly a typical chief executive. Racing to resolve critical production issues, he can often be found on the factory floor, working to fix robots. At night, he sometimes sleeps under his desk. All the while, he has been confronting an exodus of senior employees, preparing to be interviewed by the Securities and Exchange Commission, and was working with Goldman Sachs and Saudi Arabia's sovereign wealth fund to take Tesla private — until he wasn't.

Some board members have been dismayed at Mr. Musk's behavior, according to people familiar with the directors' thinking, but no active search is underway for a replacement — although there have been fitful efforts to find a top lieutenant.

James Anderson, the head of the asset management firm Baillie Gifford, Tesla's biggest shareholder after Mr. Musk, said he still had faith in the 47-year-old chief executive, calling him a “visionary leader” who had unmatched technical expertise and remained “obsessive about the details.”

Yet Mr. Anderson said he had grown increasingly worried about Mr. Musk, believing that his volatile personal life and intense work ethic were taking a steep toll. “He is so demanding, so driven by the imperative to do something good for the world,” Mr. Anderson said. “You could always see something like this happening.”

'We feel like we are at war'

At 6:30 a.m. on Aug. 18, three robots in the paint shop at the Tesla factory in Fremont, Calif., started malfunctioning. The incident forced a production halt on the Model 3, the key to the company's future.

Made aware of the stoppage, Mr. Musk went to the factory and worked into the night. The problem was resolved, but Tesla reached a troubling conclusion: The robots had been infected with malware in an act of industrial sabotage. And though they could not prove it, executives suspected they knew the culprit: a rogue employee, working at the behest of short-sellers.

Tesla is among the most shorted stocks, meaning that hedge funds are betting against it and quick to note a missed production goal or cash shortfall. David Einhorn, the billionaire founder of Greenlight Capital, is in that camp. In a letter to investors last month detailing his argument, Mr. Einhorn wrote, “Elon Musk appears erratic and desperate.”

Mr. Musk believes that the short-sellers spread misinformation about the company, and perhaps much worse. In June, Mr. Musk accused an employee of sabotage that had slowed Model 3 production, and suggested short-sellers might be to blame.

Kimbal Musk, reflecting on the battles with short-sellers, said, “We feel like we are at war.”

Plenty of other companies face the wrath of short-sellers. The issue at Tesla seems to be that for Mr. Musk — who talks earnestly about weaning the world off fossil fuels with Tesla, and colonizing the solar system with SpaceX — these attacks are not just the cost of doing business. They are malicious and misguided efforts to derail his efforts to help humanity.

“Tesla is his baby,” said Deepak Ahuja, Tesla's chief financial officer. “He takes it extremely personally.”

But with Tesla now staying public, Mr. Musk will have to continue to contend with those who doubt his vision and are rooting for Tesla to fail.

The most difficult time

When Mr. Musk ceremonially unveiled the Model 3 last summer, he billed it as the first mass-market electric vehicle, and predicted monthly production of 20,000 by year's end. But in the final three months of 2017, just 2,425 were completed.

The delays were a result of what Mr. Musk called “manufacturing hell,” an inferno that has preoccupied him for much of the past year. “This has been the most difficult time for Tesla,” said JB Straubel, the company's chief technical officer. “We knew this was going to be the case, but it's been even harder than any of us expected.”

Some of the wounds were self-inflicted.

In preparing the assembly lines, Mr. Musk became convinced that the process should be close to fully automated, using robots rather than humans whenever possible. Doing so, he believed, could make cars move through the factory at one meter per second, 10 to 20 times the speed of existing lines.

So Tesla built a factory with hundreds of robots, many programmed to perform tasks that humans could easily do. One robot, which Mr. Musk nicknamed the “flufferbot,” was designed to simply place a sound-dampening piece of fiberglass atop the battery pack.

But the flufferbot never really worked. It would fail to pick up the fiberglass, or put it in the wrong place, frequently delaying production. It was eventually replaced by factory workers.

Mr. Musk has accepted responsibility for some of these missteps, occasionally with humor. In late June, he wore a T-shirt depicting a robot that passes butter. It was an inside joke, lampooning the notion of technology for technology's sake.

After the debacle, Mr. Musk tweeted: “Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”

As the challenges have mounted, Mr. Musk has thrown himself into his work, spending hours each week walking factory floors, trying to diagnose and fix various problems on the assembly line.

“He demands personal accountability from the people that are closest to the machines,” Mr. Straubel said. “This freaks people out. They are worried that they wi..

‘I hate them’: Locals reportedly frustrated with Alphabet’s self-driving cars

Early rider use the Waymo driverless vehicles to get to school.

Alphabet's self-driving cars are annoying their neighbors in Chandler, Arizona.

More than a dozen locals who work near Waymo's office gave The Information the same unequivocal assessment of the cars, which reportedly struggle to cross a T-intersection there: “I hate them.”

One woman said that she almost hit one of the company's minivans because it suddenly stopped while trying to make a right turn, while another man said that he gets so frustrated waiting for the cars to cross the intersection that he has illegally driven around them.

The anecdotes highlight how challenging it can be for self-driving cars, which are programmed to drive conservatively, to master situations that human drivers can handle with relative ease, like merging or finding a gap in traffic to make a turn.

Waymo has been testing its vehicles in the Phoenix suburbs for little more than a year and is widely seen as the furthest along in the self-driving car space, but its safety drivers have to take control of the vehicles regularly, people with direct knowledge of the issues tell The Information.

A Waymo spokesperson says that its cars are “continually learning” and that “safety remains its highest priority” during testing. The spokesperson also said that Waymo is using feedback from its early rider program to improve its technology, though it declined to comment specifically on the intersection complaints mentioned in The Information story. The company has previously said that it plans to launch a commercial self-driving taxi service before the end of the year, but that its service will still include a Waymo employee in each car as a “chaperone.”

The potential for self-driving cars is so powerful because they eliminate aspects of human error and unpredictability that make driving dangerous, like speeding, texting, drinking or blowing through stop signs. However, as they start coexisting on roads alongside human drivers, that very unpredictability can confuse the cars, which may stop abruptly, endangering or aggravating people.

Waymo and other self-driving car companies will continue to try to work out software kinks and expand their regions of operation, but experts are divided on when self-driving cars will actually become mainstream.

As Waymo's CEO said in June during a talk at a National Governors Association meeting: the time period to make automated vehicles widespread “will be longer than you think.”

Read The Information story here.

Clarification: This piece previously referred to the Waymo employee who will be in the car when it launches its taxi service as a “safety driver.”

Behind the scenes at Waymo's top-secret testing site
10:02 AM ET Tue, 31 Oct 2017 | 02:08

‘We don’t like the trade war,’ says one of China’s biggest carmakers

China is a big market for MPVs: Geely Automobile
11:07 PM ET Wed, 22 Aug 2018 | 02:03

Geely Automobile, the third-largest carmaker in China, has been largely shielded from the ongoing trade tensions between Beijing and Washington. But the company could still be hit in other ways if the dispute drags on, a top executive said.

Geely doesn't rely on imported parts to make its cars, not does it sell many of its products outside China, which helps the automaker avoid direct hits from the trade dispute, according to Daniel Li, Geely's vice chairman and chief financial officer.

“Geely doesn't have a lot of sales to other countries yet … we don't have any cars sold to the U.S.,” Li told CNBC's “Squawk Box” on Thursday. “Nevertheless, we don't like the trade war,” he added.

Li explained that the dispute between the world's two largest economies has generated a lot of uncertainty and is starting to affect consumers' willingness to spend.

His comments come a day after the company announced a 54 percent year-over-year jump in net profit for the first half of 2018. The net profit of 6.67 billion yuan ($971.3 million) is higher than the 6.55 billion yuan estimated by four analysts, according to Thomson Reuters data.

The company sold 766,630 vehicles during the first six months of the year, 44 percent higher than the same period in 2017 and outperforming the overall automobile sales in China, Li said.

Li said the company is on track to meet its full year sales target of 1.58 million units, and has plans to launch five new models later this year, including a multi-purpose vehicle (MPV).

“As you know, China has a new birth policy to encourage every family to have a second child instead of only one child,” Li said, explaining that families would soon require more seats in a car to accommodate grandparents, parents and two children. That opens up the opportunity to sell more MPVs, which typically have seven seats, Li said.

Despite the strong earnings report, Geely shares in Hong Kong were down about 1.3 percent on Thursday morning. But some analysts remain upbeat about the company's prospects.

“The outlook for Geely remains strong, in our view, led by a strong product pipeline … Geely is still our top sector pick,” analysts from Daiwa Capital Markets wrote in a Wednesday report after the company released its earnings report.

— Reuters contributed to this report.

Ride-hailing vs. car ownership: Here’s which really costs more

Andrew Caballero Reynolds | AFP | Getty Images
Uber, the popular ride-sharing service.

If you live in a big city, you've probably heard this question: Why own a car when you can just use a ride-hailing service?

It turns out that thinking you can save money that way may be another urban legend.

New research from travel organization AAA, which advocates for individual motorists, found that ride-hailing services actually cost more per year than owning a car.

AAA compared how much you will pay for both in 20 U.S. cities.

It turns out that the average cost to own a car is $7,321 per year not including parking charges, or $10,049 with parking charges.

Those tallies are based on owning a medium sedan, plus additional costs like gas and insurance. The calculation was also based on driving 10,841 miles annually.

By contrast, ride-hailing services cost $20,118 per year to cover that same distance. That calculation includes the usage of a rental car for longer trips. The average driver takes 2.1 road trips per year, according to AAA.

Those costs do vary by city. Here is a breakdown of how much you stand to pay for ride-hailing based on where you live.

Ride hailing costs by city

City
Annual costs

Atlanta
$17,741

Austin
$19,821

Baltimore
$19,917

Boston
$27,545

Chicago
$22,020

Cleveland
$20,091

Dallas
$16,944

Denver
$20,434

Los Angeles
$17,951

Miami
$17,339

Nashville
$26,397

New York
$21,279

Philadelphia
$23,201

Phoenix
$17,436

Pittsburgh
$18,940

Salt Lake City
$18,866

San Diego
$17,316

San Francisco
$21,972

Seattle
$23,951

Washington, D.C.
$21,093

Source: AAA

*Includes the costs of rental cars for longer trips.

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