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Cadillac Shows ELR With Powertrain Beloved by Volt Owners

January 15, 2013

Cadillac Reveals ELR With Technology Beloved by Volt Users

Members of the media view the General Motors Co. Cadillac ELR coupe vehicle after the unveiling at the 2013 North American International Auto Show in Detroit, Michigan. Photographer: David Paul Morris/Bloomberg

When General Motors Co. (GM:US) decided to make a plug-in hybrid, there was lively discussion behind closed doors whether the first model should be a Chevrolet or a Cadillac. The Chevy arguments won out and the Volt was born.

The Volt -- the first car to mix all-electric capabilities with a gas engine to extend the range -- has had a tough time, with disappointing sales and, for Republicans during the presidential campaign, as a symbol of the failings of President Barack Obama’s auto-industry bailout.

Now, GM has a second chance with Volt technology: the Cadillac ELR plug-in hybrid, being revealed today at the North American International Auto Show in Detroit.

“GM is saying to the world we’re committed to this extended-range hybrid system,” said Larry Dominique, executive vice president of TrueCar.com, a website that tracks auto sales.

The Volt, chosen as 2011’s North American Car of the Year, succeeded in satisfying its customers, with 92 percent of survey respondents telling Consumer Reports they would buy one again -- the second straight year it ranked highest. GM’s luxury brand Cadillac won its first such award yesterday with its ATS sedan.

While the electric-drive Cadillac won’t go on sale until 2014 and first-year sales will likely be small, it’s important to Cadillac and to GM. It will help to freshen Cadillac’s image at a time when other luxury brands, which tend to have higher profit margins than less-expensive vehicles, have pushed Cadillac to the second tier.

‘Provocative’ Technology

“The ELR puts us in a position to be provocative, to be a technology leader, to offer something that is unique and exclusive, and those sound like attributes that go back to ‘Cadillac’ the adjective,” Bob Ferguson, the brand’s leader, said in an interview last week.

In addition, offering another model for sale can spread the costs of the technology over more vehicles and reduce the cost per car to accelerate the time to break even on the expensive technology.

The ELR will compete most directly with offerings from unprofitable luxury electric-car start-ups Tesla Motors Inc. (TSLA:US) and Fisker Automotive Inc., rather than Toyota Motor Corp. (7203)’s Lexus luxury hybrids, which are based on technology used in the popular Prius line. GM’s new car will land closer to Bayerische Motoren Werke AG (BMW)’s BMW i3 electric model, set to go into production in the fourth quarter, and Volkswagen AG (VOW)’s Porsche 918 Spyder, an $845,000 hybrid, coming later this year.

More Than Volt

While GM hasn’t said what the ELR will cost, it will be more than the Volt. It will probably cost around $60,000 to $70,000, said a person familiar with the pricing who asked not to be identified revealing private plans.

The Volt went on sale in 2010 with the aim of putting GM’s Chevrolet on the forefront of green technology globally and taking on Toyota’s mass-market Prius hybrid, which starts at $24,200. GM originally aimed to sell 60,000 Volts worldwide last year before lowering the target to 35,000. In the U.S., it sold 23,461. GM hasn’t said how many it sold worldwide.

Part of Volt’s problem has been price. Starting at $39,145, the four-seat small car loaded up with pricey batteries is much more costly than a similar-size traditional compact, even with a $7,500 tax credit. The Toyota Corolla, for example, starts at $16,230. The best deal on a Volt has been through a lease, with monthly payments currently advertised at $329 on Chevy’s website.

Cadillac Demographics

That’s one of the arguments for why offering Volt as a Cadillac may have helped. Cadillac buyers expect to pay more than Chevrolet buyers, and luxury buyers are also attracted to the latest in technology, such as the Volt’s unique powertrain system.

“The demographics of the electric-car buyer are really more in line with Cadillac than Chevrolet,” said Rebecca Lindland, an industry analyst with IHS Automotive.

Compared with buyers of mainstream models, luxury buyers more often finance the purchase with a lease, which often requires a smaller down payment or lower monthly bill. About 38 percent of Cadillac sales last year in the U.S. were leases, while Chevrolet had only 12 percent, according to Edmunds.com. Of GM’s U.S. Volt sales last year, 46 percent were leases, Edmunds said.

Since the days of Henry Leland, who founded Cadillac more than 110 years ago, the brand prided itself on having some of the auto industry’s innovations. Electric starters, power steering and mass-produced V-8 engines were first in Cadillac cars before costs came down and spread to cheaper vehicles. Volt technology would have been another in the list.

Brand Arguments

Ferguson acknowledged that’d he heard the arguments before that Cadillac should have gone first. Another GM executive, Ed Welburn, the company’s design chief, confirmed it was part of the early development discussions.

If the model was just for the U.S., then the arguments for selling the technology under a Cadillac badge first would be right, said Bob Lutz, the former GM vice chairman, who led development of the Volt.

“But Chevrolet was/is GM’s global brand, and we wanted global distribution,” he said in an e-mail. “A Cadillac- branded Volt would have had almost zero potential in Europe, Latin America, Eastern Europe, Australia and Asia.”

As the debate about Volt continued, GM designers and engineers worked in the background on the ELR. The new two-door Cadillac is sportier than the four-door Chevy. It’s as if the Volt and Cadillac CTS Coupe had a baby named ELR. The electric car’s styling includes a muscular hood, wide stance, 20-inch wheels and tail-lights that form slight wings that hint at Cadillac designs of a bygone era.

Interior Touches

Inside, the SLR has four seats, just as the Volt does, while the interior touches are less nerdy and more refined than its Chevrolet brother. Opus semi-aniline leather seats are offered and engineers dreamed up an electronic-assisted cup- holder door.

The Volt can go about 38 miles on all-electric power before the gasoline engine kicks on, Chris Thomason, ELR chief engineer said. The ELR, which is heavier, will go about 35 miles, while having a “radically” driving experience, he said, one that is “more performance-oriented.”

In focus groups held in California, GM found that potential buyers of the ELR, which starts production late this year, were interested in different things than Volt shoppers.

“The top question was not around fuel economy,” Ferguson said of ELR’s market. “It was more around performance, styling and technology leadership.”

While U.S. Volt sales may increase 70 percent to 40,000 this year, ELR’s first year of sales in 2014 may reach only 1,500, said Alan Baum, an industry researcher.

Still, this isn’t just about ELR sales, GM Chief Executive Officer Dan Akerson said last week in Detroit.

“It will be a statement car that I think will bring people into the showroom,” he said.

To contact the reporter on this story: Tim Higgins in Southfield, Michigan, at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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