After updating Gradle to com.android.tools.build:gradle:3.1.0, in the log I now see:
Folder E:\\WORK\\App\\car_android\\carapp\\build\\
According to this Android Studio issue, "The root issue with Kapt is that the Kapt resolver in IDEA from JetBrains registers those folders as 'being in a invalid path'. This is a misuse of the API."
As of 6/11/2018, there's a fix in place to double-check those messages and suppress ones about paths which are actually valid.