Cadillac's Electric Future Scares Off US Dealers

Dec. 05, 2020 10:01 AM ET by Aaron Brzozowski Electric Vehicles / 26 Comments

Out of 880 US dealers, about 150 have chosen to take a buyout rather than investing to be EV-ready.

Paving the way for Cadillac's transformation into a premium, luxurious EV brand, General Motors gave its US Cadillac dealers something of an ultimatum this year: invest hundreds of thousands of dollars into the necessary upgrades to sell electric vehicles, or take a buyout and stop selling new Cadillacs. The investments are to cover the costs of things like adding EV charging stations, purchasing EV-specific tools for service departments, and training service technicians to work on battery-electric vehicles.

As we reported back in September, the mandatory upgrades have created serious doubts for a number of Cadillac dealerships, especially in rural areas where EV adoption is virtually non-existent. Now, we're getting a better sense of just how many dealers GM might have alienated with the agreement.

According to the Wall Street Journal, a total of about 150 US Cadillac dealers have opted to take GM on their buyout offer, out of a total nationwide network of around 880 dealers. In other words, slightly more than one sixth of the brand's US dealer network have decided that now is as good a time as any to get out of the Cadillac business, choosing buyouts that reportedly ranged anywhere from $300,000 to $1,000,000.

For context, the average new car dealer makes roughly one million annually in pre-tax profits.

It's a pretty startling loss, to be sure, but GM has for years shown something of a desire to reduce its number of dealerships in the US. Fellow luxury brands like BMW and Mercedes-Benz have roughly a third as many dealers in the country as Cadillac's 880-strong network, leading to lower field support costs, simpler logistics, and for the dealers themselves, fatter margins.

So far, Cadillac has shown off just a single future pure-electric vehicle, the Cadillac Lyriq, although several more models are already planned, including the hand-built Celestiq electric flagship and a large three-row similar to the Cadillac Escalade.