Cadillac Plans Several Plug-In Models to Build Tech Credibility

The Cadillac CT6 is shown at the New York International Auto Show event in Duggal Greenhouse in the Brooklyn borough of New York, on March 31, 2015.

John Minchillo/AP Photo

General Motors Co.’s Cadillac is planning to roll out plug-in hybrid versions of several models as the division tries to match up with leading German luxury brands.

Cadillac is at the early stages of a $12 billion investment in models aimed at getting a bigger share of the profitable global luxury market, which is now dominated by Daimler AG’s Mercedes-Benz, Volkswagen AG’s Audi and BMW AG’s namesake brand. That effort will include adding a plug-in hybrid option to some future models, said Cadillac President Johan de Nysschen. The cars will be able to drive using solely the electric motor, though they won’t have as much pure-electric range as a Chevrolet Volt, he said.

To really compete in luxury, Cadillac’s executives said the brand needs an electric-car story that shows it’s at the cutting edge of technology. Tesla Motors Inc. has become a leader in electric cars while all of the top German brands have plug-in hybrids on sale or coming soon. BMW sells an i3 electric car and an i8 plug-in hybrid.

“We will roll out plug-in hybrids across our portfolio,” de Nysschen said in an interview. “It’s part of confirming the progressive nature of the brand.”

The CT6, which Cadillac debuted to the world at the New York auto show this week, will be the first car to offer a plug-in hybrid options and other models will follow, de Nysschen said. The Volt-based Cadillac ELR coupe comes only as a plug-in, and with a price of $75,000, only 1,310 were sold in the U.S. last year.

Planning Ahead

Plug-in hybrids typically run on their electric motor until the battery reaches a low level of charge. Then a gasoline-burning engine kicks on to recharge the battery or to power the wheels.

GM has been engineering some future models so that the company can fit a battery and electric drive system into the cars as an option, said Mark Reuss, GM’s executive vice president of product development. With shorter electric-only range than a Volt, they require smaller, less expensive batteries.

While electric cars and hybrids make up a tiny portion of the almost 17 million vehicles that may be sold in the U.S. this year, Cadillac needs to sell plug-in hybrids to give the brand some high-tech elan and to help GM meet government regulations, de Nysschen said.

Luxury brands are good for pioneering electric cars and hybrids because the hardware is expensive and the high-end names stand a better chance of recouping some of the cost, said Xavier Mosquet, a managing director of the consulting firm Boston Consulting Group.

“Innovation has to start at the top where customers can afford to pay for it,” Mosquet said in an interview.

In addition to improving fuel economy, the plug-in hybrid Cadillacs will give drivers experience with electric drive without worrying about needing to recharge the battery when they are away from home or a charging station, de Nysschen said.

“There is a question about the long-term economics of battery-electric cars,” he said. “I think plug-in hybrids are the best solution.”

Before it's here, it's on the Bloomberg Terminal.