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Waymo picks Detroit factory to build self-driving fleet by mid-2019

SAN FRANCISCO — Alphabet Inc's Waymo said on Tuesday it had chosen a factory in Detroit to mass produce self-driving cars, looking to the historical heart of the auto industry to build the vehicles of the future. The company's chief executive, John Krafcik, said in a blog post that Waymo would partner with American Axle & Manufacturing to lease and repurpose an existing Detroit facility that will be operational by mid-2019. The facility belongs to American Axle, next to the GM Hamtramck facility that is at risk of being shuttered, and is across the Detroit River from Windsor, where the Chrysler Pacificas that Waymo uses are built. Presumably Waymo will do the self-driving fitment of Pacificas at the new facility. Waymo said in January it had chosen Michigan for its first production facility, adding it would receive incentives from the public-private partnership agency, the Michigan Economic Development Corporation, and create up to 400 jobs over time exclusively related to self-driving. Krafcik said in his blog post Tuesday that it's the "perfect facility," with up to 200,000 square feet to expand into. He said Waymo will hire the region's auto manufacturing talent. Waymo plans to buy 62,000 Pacificas and 20,000 Jaguars and convert them for autonomous driving. By 2022, it intends to conduct about 1 million trips per day. In a sea of rivals, Waymo is generally thought of as far ahead in the self-driving race. It already operates a robotaxi service in Arizona that it plans to expand geographically over time. Global automakers, large technology companies and startups are all engaged in self-driving efforts, but experts expect it will be years before systems are ready to be rolled out in all areas, with software and regulations among the many challenges. Waymo is competing with rivals General Motors and Uber Technologies to deploy such vehicles for the masses. Tesla CEO Elon Musk has also announced the company plans to launch a robotaxi service in 2020. Waymo, which has been working on self-driving technology for a decade, provided few new details. American Axle, with which Waymo is partnering for its Detroit facility, was formed in 1994 when an investment team purchased five plants that General Motors had put up for sale. GM plans to end output at its last Detroit factory next year, after announcing in November a plan to halt production at five North American assembly plants and cut about 15,000 jobs.

Buy Ford and GM stock and make 5%

Want to make a five-percent return when 10-year treasuries are paying around two percent? Ford (F) and General Motors (GM) have solid balance sheets, strong cash flow, solid earnings, and growing markets. By all accounts, they are smart investments. But the market is down on these stocks. Why? Some of the stupid excuses include: They are cyclical companies The Detroit 3 have lost 3.5 million in sales since 2000 The world economy is shaky GM recently filed for bankruptcy Their markets have peaked They haven't changed their ways Let's take these criticisms one by one: They Are Cyclical Companies Yes, they are cyclical. Every company is cyclical. Every industry is cyclical. Some more than others, but not every company is immune from swings in the market. Banks used to be 'non-cyclical' leader, not anymore. Airline stocks are just as cyclical as auto stocks, yet they are trading at multiples greater than the auto industry. Why? And what accounts for the irrational stock price for Tesla (TSLA)? At least Ford (F) and General Motors (GM) make money and have positive cash flows. In fact, both companies have a net positive cash position. They have more cash on hand than liabilities. Auto sales in the United States hit a record 17.5 million vehicles in 2015. During the Great Recession, Ford (F) and General Motors (GM) cut their break even points to 10 million vehicles per year. Anything above an annual U.S. volume of 10 million vehicles is profit. And what a profit they make. Sales of Ford's F-150 continues to be the best-selling vehicle in the United States for over 30 years. Detroit 3 Have Lost 3.5 million in Sales Since 2000 Automotive News reports General Motors (GM), Ford (F) and Chrysler (FCA) have lost a combined 3.5 million vehicles sales since 2000. So how can they be making more money? Two big reasons – Fleet Sales and the UAW. Fleet Sales The Detroit 3 used to own car rental companies to keep their factories running. Ford owned Hertz (HTZ), General Motors owned all of National Car Rental and 29 percent of Avis, and Chrysler, the forerunner to Fiat Chrysler (FCA), used to own Thrifty Car Rental and Dollar Rent-A-Car. The Detroit 3 owned these rental companies to have a place to sell their bad product and keep their factories running. These were low margin sales, and in many cases, were money losers for the Detroit 3. They no longer own auto rental companies.

Chrysler and Fiat offering $1,000 rebates to VW owners as Marchionne gets tough

The throw-down between Fiat CEO Sergio Marchionne and Volkswagen has heated up in earnest. According to Bloomberg, Fiat and Chrysler are now offering current Volkswagen owners in the US $1,000 rebates to trade in their ride. It's the latest in a series of shots Marchionne has taken at his German rival. As you may recall, the Fiat executive entered into a spat with Volkwagen board chairman Ferdinand Piëch and CEO Martin Winterkorn in October after the duo called for Marchionne's resignation from presidency of the European Automotive Manufacturers Association (AECA). At the time, the Volkswagen executives were quoted as saying Fiat would not survive the European economic downturn.
In response, Marchionne called the German executives "reprehensible," and accused Volkswagen of using a pricing strategy that has created created a "bloodbath" in the EU. Volkswagen has taken to steep discounting to carve out ever-larger slices of market share in Europe, but the company has a much smaller foothold in the US. Marchionne may be trying to hit Volkswagen where the manufacturer is weakest with the new Fiat new incentive program.
Late last week, the Fiat executive was voted to a second term as ACEA president.