GM realized such a model would compete with the GMC Acadia and Buick Enclave.
Cadillac is well aware its large Escalade doesn't appeal to everyone. However, there's still a market for full-size crossovers. GM is also cognizant of this, hence its Chevy Traverse, GMC Acadia, Buick Enclave triplets. So plans were put into place and initial design work begun on a new Caddie three-row crossover, which was slated to arrive on the market for 2018. But that's no more. Ward's Auto is reporting that plans for this luxury crossover have been shelved.
The apparent reason is that GM is afraid said crossover would interfere with Acadia and Enclave sales. And they're probably right. However, Cadillac still has plans for a new crossover, although it'll be smaller and limited to just two rows of seating. There's no word as to which platform that could be based on, but a more upscale version of the Buick Encore is possible. Cadillac is also still toying with the idea of expanding the Escalade name even further. Instead of a new Escalade EXT, a small CUV replacement is much better suited to the times.