By now it’s old news that Cadillac (and the GMC Hummer) is going to be at the forefront of GM’s massive commitment to EVs. At a recent investor presentation, GM CEO Mary Barra announced that it was increasing its investment in EVs by $7 billion through 2025, for a total of $27 billion (including autonomous vehicles). Her fighting words are:
“We’re committed to fighting for EV market share until we are number one in North America”
Cadillac will be the division that spearheads that initiative (along with the Hummer), starting with the Lyric (above) whose target sales date has been pushed up nine months to early 2022. And Cadillac envisions eliminating IC vehicles form its line-up by 2030, although that’s not yet etched in lithium.
Not surprisingly, a significant number of Cadillac’s smaller dealers (and there are quite a few of them) are wary about having to commit some $200,000+ in infrastructure, training and other costs to sell EVs. So GM is offering them an early retirement: up to $500k to hand in their franchises.
According to a story in autonews.com, dealers have only until November 30 to decide whether to accept the buyout offers. From that story:
According to dealer lawyers and consultants, dealers who take the buyout can still sell new Cadillacs through 2021, and the brand’s used vehicle auctions through 2024. According to some sources, a number of smaller dealers see this buyout as a god-send, as it represents the equivalent of up to five or ten years’ of profits from selling a few Cadillacs per month. But that doesn’t account for on-going service revenue and profits, so it may well be a difficult decision for some dealers.
Meanwhile, GM plans to introduce no less than 30 EV models by 2025, of which two-thirds will be available in the US from its various brands. The key to profitability from building EVs is GM’s new Ultium batteries, which are reportedly 40% cheaper than the current batteries used in the Chevy Bolt. And GM anticipates further cost reductions.
All of this is a reflection that the real EV revolution is just about to begin (other than at Tesla), as the majors switch from building intrinsically unprofitable “compliance-mobiles” to building EVs which will absolutely need to be profitable, at least over the longer haul. That may take a while, and this is precisely why GM is wisely starting at the most expensive vehicles. The GMC Hummer EV pickup will start at $79,995, but the Edition 1 series will cost $112,595.
The EV pickup field is quickly getting crowded, but there’s no question that the Hummer is relatively well-placed to compete, given its considerable brand equity and unique looks and capabilities.
As to how the rest of GM’s assault on EV dominance goes, it will be highly interesting to watch. I’m sure some long-time GM watchers will wonder if this is 1980 all over again, when GM massively stubbed its toes with the introduction of its new X-Body FWD cars. Time will tell.