No one can accuse Cadillac of strategic inflexibility.
In 2014, General Motors recruited former Audi and Infiniti executive John de Nysschen and signed off on a 5-year, $12 billion product renovation project aimed at filling in Cadillac’s gaps in the rapidly growing crossover segments.
But in 2018, Chairman and CEO Mary Barra and the GM board ran out of patience with de Nysschen and replaced him with GM lifer Steve Carlisle.
The new offerings such as the XT5 and XT4 were well received by critics, but the results were meager, at least in the U.S. Since 2016 Cadillac sales in its home market slipped from 170,006 to 156,440 in 2017 then to 154,702 in 2018, according to CarSalesBase.com
While final 2019 won’t be reported until early in the new year, Carlisle said he expects Cadillac’s first annual increase in U.S. sales since 2013.
Thursday, Carlisle announced that Cadillac will reinvent itself, yet again, over the next decade as an entire electrically-powered brand, and abandon the alphanumeric vehicle names it has phased in since 2003.
“Escalade is an awesome name,” Carlisle said, referring to its flagship full-size SUV that dealers and loyal Cadillac customers covet.
But the more ambitious part of the new makeover will be converting most, and possibly all, of its product lineup to battery propulsion by 2030.
The brand’s track record in electrification leaves much to be desired. Cadillac discontinued the ELR, extended-range plug-in hybrid in 2016, after only a few years.
There was a plug-in hybrid version of the CT6 sedan, launched in 2016, but it was assembled in China, and never got traction in the U.S.
But China is where this conversion to battery propulsion will happen first. Like its sister brand Buick, Cadillac now sells many more vehicles in China than in the U.S. (228,043 vs. 154,702 in 2018).
China manufactured and sold about 1.2 million plug-in electric vehicles in 2018, more than triple EV sales in the U.S. New electric vehicles accounted for 4.2% of China’s new car market last year.
The country will soon control about 75% of global battery production capacity.
China plans to have 500,000 charging stations in place by the end of 2020. That compares with only 23,702, according to the U.S. Department of Energy’s Alternative Fuels Data Center. More than a third of those are in California, Oregon and Washington.
Reuters, citing supplier sources, reported that Cadillac plans to introduce a compact electric SUV in China in 2022, with a similar model scheduled for U.S. production in late 2023, most likely at its Detroit-Hamtramck assembly plant that will undergo a $3 billion renovation and retooling.
Earlier this year, the luxury brand unveiled a mid-size electric SUV concept.
Several major challenges must be overcome.
First, range must improve, at least to the 300 to 400-mile range on a full charge. And the price differential between EVs and comparable internal combustion engine brands must shrink.
For example, a 2019 Honda Insight LX hybrid starts from a base price of about $22,830. A comparable Honda Civic LX coupe starts at $19,350. But that $3,500 will be recovered easily over the life of the Insight because an owner’s electric bill will increase much less than what he would otherwise spend on gas.
The good news is the cost of batteries continues to fall.
One year ago, a Bloomberg New Energy Finance report found that the price of lithium-ion batteries has dropped 85% between 2010 and 2018, or from $1,160 per kilowatt-hour to $176 per kWh.
Second, General Motors and other traditional ICE manufacturers need to put much more marketing muscle behind these electric vehicles. There’s no doubt that the engineering prowess exists, as proven by models such as the Chevrolet Bolt and second-generation Volt.
The will and advertising heft have been lacking.
Will Cadillac or any other brand ever spend to promote battery-powered models on a similar scale to what they shell out for pickup trucks or large SUVs ?
The other paradox is that GM, as well as Toyota and Fiat Chrysler, has sided with the Trump administration in its crusade to stop California and other states from enforcing their own limits on greenhouse gas emissions.
There currently is no regulatory incentive to sell cleaner vehicles. Many consumers are still unfamiliar with the mechanics or availability of charging an EV. Few states, outside of the West Coast, are spending to expand infrastructure.
Those factors could change, depending on the results of the 2020 election.
Whether the latest reinvention pans out or not for Cadillac, Carlisle and his team recognized the need to change.