About 150 U.S. Cadillac Dealers to Exit Brand, Rather Than Sell Electric Cars | Hacker News Reader

About 150 U.S. Cadillac Dealers to Exit Brand, Rather Than Sell Electric Cars

wsj.com

176 pointslxm158 comments

The real details are buried in the article. Dealerships were required to either spend at least $200K on charging stations and other upgrades, or they could take a buyout offer for $300K to $1 million.

About 17% of total dealerships took the deal. I assume many of those were already declining and chose the convenient exit option instead of doubling down on their already declining dealership investment in the middle of a pandemic.

> The buyout offers ranged from around $300,000 to more than $1 million, the people familiar with the effort added. About 17% of Cadillac’s 880 U.S. dealerships agreed to take the offer to end their franchise agreements for the luxury brand

That doesn't really make a good headline

Using dealerships to build a charging network is a nice idea. The knock on benefit of getting car owners to your dealership more frequently and hopefully selling more cars.

That's a terrible idea from a user perspective. All of ionity and tesla's superchargers are in urban or shopping areas that allow you to quickly buy some food, go shopping or go to a bathroom in a respectable location.

I personally would have zero interest in going to my car dealership as their locations are typically far away from anything urban or of interst.

Same here, I avoid them when I can. It won’t be too long before the gas stations are fast chargers, though- I give it 20 years.

Simply replacing gas stations with chargers is a step back in electric's flexiblity. They don't need large underground storage tanks and special zoning. I think gas stations will simply vanish, and chargers will stay next to useful places like businesses, grocery stores restraurants, malls, etc.

This is true in Urban markets, but in more rural areas the gas station is the grocery store and the restaurant. It will probably help those businesses by giving bored drivers a reason to come into the business and spend.

Now the trunk is auto drive (which is less problematic for long running one that is train service in nature), the business model has to be rethink.

In the ideal world we'd turn the existing gas stations into solar powered super charger stations (which do sort of look like current gas stations [1]). Existing gas stations are often found near useful places like grocery/restaurant/business areas.

But as you say, there are less needs for equipment and regulation, so we could potentially have existing gas station locations converted AND new sites even closer and even more liberally sprinkled about providing even more convenience.

[1] https://electrek.co/2017/04/24/tesla-new-supercharger-statio...

That’s sort of pointless though unless the gas station is in the middle of nowhere. There is no point in wasting valuable real estate with solar panels covering a parking place in front of a building nobody has a reason to visit.

The grid functions with renewable energy so I would rather use the super charger at the grocery store than the one at a previous gas station.

Middle of nowhere is a good place for a charger. mmost people will charge at home 95 % of the time. It is only the 5% trips where you don't get back home that you need a charger. Middle of nowhere is where that is likely to be. Look at truck stops, they are all stores and restaurants, everything someone going a long distance needs. They are never inside a city because land is too expensive and anyone in the city for the night has a parking space.

Maybe in the US. House ownership isn't that common in every country. It's rather difficult to charge your car at home in an apartment building.

I wonder whether the charging cables will start getting stolen like rims have been.

I think it's largely a matter of just getting charging stations in more places. People who own cars must park them somewhere, and all those somewheres can have utilities installed if someone's willing to pay for it, it's just a matter of figuring out how to make it happen (whether via mandates or incentives or just market forces).

They don't have to be superchargers, either, just good enough for overnight charging.

The transition will probably take a while, but I expect that eventually people will stop calling them "electric cars" and just call them "cars" and charging stations will become part of the ubiquitous infrastructure of cities, like sidewalks and fire hydrants.

I don't know if people stealing charging cables is a common problem now. People complain where I live about catalytic converter thefts. There are probably ways to solve the issue of people stealing expensive charging equipment and re-selling them, but if people steal cables simply to recover ten dollars or thereabouts of copper, I don't know how to fix that (aside from "move to a nicer neighborhood"). Maybe use less valuable metals like aluminum, if that can be made to work in this application?

I expect apartments will start installing chargers for residents. They just need a way to ensure that they don't lose money giving free power away. The early ones will do it for a direct profit. The later ones will do it because potentialnnew residents will start saying "nice place, but no placeto charge my car", after a while they will get the message and add them to compete. (where needed)

Event though youcan charge in minutes, that doesn't mean you should.

There are a bunch of out-of-the-way gas stations in the US South that would benefit greatly from adding electric "pumps". They are generally located on vacation friendly roadways and are frequented mostly by travellers on their way to the beach.

Adding several electric recharge slots would be a great way to bring people and keep them there for 10-20 minutes. Restroom and snacks (or even meals) for 4-5 people plus you get to clean the bugs off of your windscreen. I personally make this trip every year (sometimes twice a year) and would love to see more electric refueling stops.

Still think battery that can plug and play is a good idea, with all sort of monitoring tools you would not trade your good rental one with a bad one. A d if you have two to three you can simply like drinks just replace it when drive along. (Heave enough not easy to do in your neighbourhood store.). Charging is only for like cinema etc. Gas station is a goner except as cafe etc.

What I don't understand is why a replaceable battery is seen as an all or nothing proposition. Design the car so that you could add 1 or 2 extra batteries when you need them.

So 90%, 95%, 99% of the time you're using your built-in 150-mile range. But you're not dragging around the weight of the extra 200, 250, 300 miles that you don't need. Your car weighs a lot less so you get better eMPG.

Tesla did a demo of having a battery swap: https://www.youtube.com/watch?v=H5V0vL3nnHY That's really cool but if you could roll into Jiffy Lube (now offering Jiffy Volts) and get your extra batteries ...

I like that idea. It's a little tricky to pull off, though. Adding cells in series increases the voltage (which the car might not be designed to handle) or adding them in parallel means they have to be well-matched to what the car already has.

I don't know if anyone has tried this, but a solution I like for adding dissimilar batteries is to break the battery up into blocks that are linked in series, with each block being, let's say, 50 volts. Maybe the stock battery has five of these in series for 250 volts.

If you add more blocks, it exceeds the voltage specifications. So what happens is that each block has a contactor (i.e. a big relay) that can bypass that block; it just looks like a 0-volt battery when enabled.

Supposing you add two extra blocks for a long trip. Then you have a scheduler that disables two blocks at a time on a rotating schedule, so it always has 250 volts. If the added blocks have more amp-hours than the OEM blocks, that's fine: they'll just be enabled for a longer duration. Rotating batteries in and out can be done in a way that keeps their voltages roughly equal with each other as they're depleted.

Maybe this is too complicated and too much of a hassle to be worth it in general (as opposed to just building a car with a big battery to begin with). I'm also not sure if typical relatively-inexpensive contactors can tolerate being switched on and off every few minutes while under load.

On the plus side, you could probably just have a few kinds of generic "extra" batteries that work in a wide range of vehicle as long as they can handle the required current. They wouldn't have to be an exact match for what's already in the car.

More than a handful of the high speed super chargers need some pretty serious electrical infrastructure so there's still a pretty important niche for something like a gas station for people taking longer trips where the charging time means you need somewhere to kill time while you charge.

Here in Michigan, we have lots of "dealership rows" where I can imagine these being installed. They're technically shopping areas, but they're very car-centric, with 5- or 7-lane 45mph roads with tons of curb cuts and huge parking lots all around. You'll have the dealerships grouped by big franchises, each building doing it's best at giving the impression of separate businesses for imports, one for each of the big 3, a used lot, and a carwash and probably a gas station. The other side of the pedestrian-impassable road may have a mall, a big box store, fast food, or small retailers, and there's probably more a half mile down the road, but there's no sidewalk or safe way to walk there from the dealership.

Some malls making an effort to be more relevant than they were in the 80s have charging spots in their parking lots, that would be a lot more attractive.

Yes, these are common. However, it's important to ask yourself why they're common. They're usually chosen because of cheap real estate and car buying being a destination event. i.e. we buy cars infrequently enough that we value ability to choose among more options more highly than the time it takes us to arrive at a destination. This is the opposite of how we consume fuel. How often do you drive out of your way for a lower gas price? I almost never do.

Costco charges enough less for gas that I'll often make a special trip to fill up there. But I also try to combine that with some shopping, which I suppose is why they do it.

If it's a "yes, and" situation, it's still a net positive.

GM does have a few in retail locations. The issue is unlike Tesla Superchargers they aren't maintained. If they even work, it outputs very little charge and often drivers of non-EV cars will park in those spots. It's so terrible that I fail to see the point of even having them.

Agreed. The only time I ever had to wait for a Supercharger was at the one at the Tesla store in Nashville. It had 6 chargers, but 3 were being used by the people who worked at the store, so only 3 were available for other use.

Harley Davidson dealerships attract traveling Harley owners.

That isn't what happened with Nissan. I own a leaf and have been following the whole situation since it launched. They required every dealership to install chargers. Most have moved them to the corner of the lot in protest b/c people just charge and leave.

One of the issues with electrics is that they need almost no maintenance. Dealerships don't make money on sales. So it didn't take long for the Nissan dealers to put two and two together. Fortunately, they are contractually bound to support the chargers at this point.

So we can all assume they will be out of business in 20-30 years? Great. Doesn't sound like a real loss.

I assume you haven't dealt with Tesla's purchase and service model.

I have (twice). Good riddance to traditional dealers.

>Most have moved them to the corner of the lot in protest b/c people just charge and leave.

What were they expecting...? lol

> Most have moved them to the corner of the lot in protest

Not much of a protest. Sounds better for both the dealership and the customers.

> They required every dealership to install chargers. Most have moved them to the corner of the lot in protest b/c people just charge and leave.

So...its in the most convenient location for the charger users (since they don't fight other dealership traffic) and for other dealership operations (since they don't fight charger users) ... how is this a protest or, for that matter, anything different that what Nissan corporate would most want them to do?

The last thing I'd want to do while charging my car is talk to salespeople

Nissan dealerships are effectively franchises and don't get much money from those chargers, if at all (and even if they did, it can't compare to the amount they make from car sales).

> One of the issues with electrics is that they need almost no maintenance.

But sometimes they do. Window motors fail. Air-conditioner stops blowing cold. Whatever. Stuff happens. And in a Tesla, it's a nightmare because there are no dealers and most independent shops won't touch them.

From a users perspective though, this is terrible. Typically you want to use the chargers when you are on a road trip. And, at least where I live, the car dealerships are not convenient to the highway.

For the "apartment chargers" (aka anyone who can't charge at home or work for whatever reason) this might make some sense as a "visibility" scheme. The chargers will probably be open as well, and allow other car owners to use them… that might help drive foot traffic?

The car dealerships in a lot of the country are actually convenient to the highway or major state routes - especially as you get into less urban areas.

In my life, the only car dealership I've been to that wasn't adjacent to at least a US highway, if not an interstate, was some fancy Porsche-Audi combo. (No purchase was made there.)

I don't think that works. Would people really want to go to the location of dealerships, usually on high traffic roads and commercial districts, far from suburban homes to charge their vehicles?

I'd rather they setup a charging setup at homes or residential areas.

I suspect that the goal is really to ensure that cars on the lot are properly charged. When I was looking into a PHEV a few years back, everyone online was complaining the cars were never, ever charged. That had to hurt sales since PHEVs generally perform worse on gas and then have engine noise.

The charging stations at dealerships are meant first for the dealerships, visitors are secondary.

When you're selling EV's, you don't want your outlets to say "sorry, can't do a test drive, our cars aren't charged" (before uberlyft, how many times did you hop into a cab only to have the guy say "sorry, the credit card machine is broken"). And when people do buy the car, they don't want you driving off the lot with can-I-even-get-home range anxiety as your first experience with electric.

So the chargers-at-dealerships requirements are there to make sure dealers can first just sell the cars. Second usage is maintenance -- yeah, EV's don't need oil changes, but they still get their mirrors broken off at the same rate as any other car. Think getting a range top-up after you drop off the car for whatever repair as part of your premium service package upsell.

It's not about building out a destination charging network, it's about making sure their EV retail outlets can effectively retail EV's.

Can’t stop laughing on this “ can-I-even-get-home range anxiety as your first experience with electric.”

> And when people do buy the car, they don't want you driving off the lot with can-I-even-get-home range anxiety

This rings true. My last car came with enough fuel to prove the fuel gauge was working, which I realised just as I was about to pull onto the (local) highway.

My local [car brand] dealer doesn't have a charger for my car. As such, I always make sure that my car is charged before I take it over there.

I mean, they could charge them off 120V, but that's like 1/4 of the speed as you can get off a dedicated charger, or less if they install fast chargers, which is what I'd expect for a $200k/dealer installation.

I'm guessing most dealerships already have 240V at least. Car lifts need a lot of power, unless you want to be waiting around for minutes to lift a car. That's more than enough to charge a test drive car overnight.

I don't know that they're building a charging network for Cadillac owners so much as making sure their dealerships are capable of selling and servicing electric cars. You can't do many test drives if you can't charge the cars.

They’re probably level 2 chargers so that when you buy the car, it’s actually at 100% battery. Hyundai does this.

Not really all that buried, I was able to read that portion without a WSJ subscription.

But clearly intentionally left out of the headline, which is the real problem

A regulation requiring headlines to reflect article content would solve about half of the problems caused by social media.

> A regulation requiring headlines to reflect article content

That is literally asking the impossible of journalists.

Unless the headline is as long as the article, there will always be some nuance from the article left out of some headlines.

But too often the headline is contrary to the article, like this.

The headline suggests some animosity towards electric cars where no such animosity is in evidence.

Yeah, I also read that part and got the distinct impression that the journalist is deliberately trying to misinterpret some facts to push their preferred narrative (electric cars not that great, Tesla overvalued).

Maybe that's true, maybe it's not, but I don't think the fact that 17% of Cadillac dealers can't afford a $200,000 upgrade supports that hypothesis all that well.

If it's high up in the article, and the headline is misleading, that means the problem lies with the editor rather than the journalists. Journalists do not write their own headlines.

It's not just the headline. After stating that most of the dealers who took the buyout only sold a few Cadillacs a month, the article goes on to say that they took the buyout because of skepticism about the prospect electric cars. I don't see how they draw that connection instead of the more obvious conclusion that making a massive investment to support a brand that you don't sell a lot of is not financially feasible.

Also in the article,

> Most dealers who accepted the buyout ... sell only a handful of Cadillacs a month.

Makes sense. People already struggling or on the way out take the deal and exit the game.

It’s common for dealerships to hold several franchises too. So they wouldn’t even necessarily be struggling, just reacting to Cadillac performing worse than Toyota, for example

Also in the article,

>Most dealers who accepted the buyout also own one or more of GM’s other brands—Chevrolet, Buick and GMC...

This is why I read the comments first. Thanks for doing my homework.

Once there's enough comments reading the actual article becomes pointless

Wow, that is what most of us do in good sites like HN. The signal to noise level is way beyond normal. Thanks all.

I'd like to see the ratio as a percentage of domestic Cadillac sales

Cadillac has something like 970 US dealers and sold roughly 129,000 cars last year. Half the dealers sell under 50 cars a month.

That's 970 dealers after culling 400 Cadillac dealers during their bankruptcy, btw.

Buried as in not in the title of the article? That info was in the 3rd paragraph

It is rather odd. Most dealers selling a handful of cars took the GM buyout in 2008. Perhaps they spent the couple of hundred thousand dollars back then and things didn't turn out as well as they hoped?

Spoke with my local Ford dealer who knows that I am interested in one of the Mustang EV's. He showed my the two chargers and shop tools they were required to buy to sell the Mustang EV. I think he said it was around $40K plus the cost of a week or two training off site. I wonder what GM is doing that triples that cost?

When a dealer sells one of any car they have a list of replacement parts that the manufacturer requires they buy (and keep in stock for a few years), along with training for the mechanics (not all, but at least one needs training in anything specific to the car). Thus the first sale of any loses money. They make it up with more sales over time. Actually many lose money on new car sales, but make it up on parts and maintenance.

> Accept a buyout offer to exit from the brand or spend roughly $200,000 on dealership upgrades

> The buyout offers ranged from around $300,000 to more than $1 million

Seems like slow-moving Cadillac dealerships held out and got a good opportunity to leave.

Possibly Cadillac won too by forcing down a lower buyout price on members that they didn’t want to keep either?

“Declining brand dealerships accept generous buyout offer”

Edit: Auto dealership businesses are traditionally lucrative (service revenue, mostly, based on my conversations with franchise owners), and if $200k in capex wasn’t worth it (based on forecasted future revenue and profit), I think that says volumes about the future of the Cadillac brand.

You have exposed the problem with electric cars and dealership though. Electric cars do not need as much service, ALOT LESS infact. Thus the dealership will have to get more revenue from the initial sale instead of reoccurring service revenue.

If the brand/dealership is already struggling switching to electrics is likely going to be a negative revenue hit for any dealership that survives on service revenue

Agreed! All dealerships are dead long term (with possible exits/buyouts offered by manufacturers for service center/gallery conversions to match what Tesla has). Just like layoffs come in waves in struggling enterprises, this is just the first salvo.

Well regulations will ensure dealerships are around for a long long time to come. In most states it is illegal for the major companies (Ford, GM, Toyota, Honda, etc) to sell direct to the public, once they start a dealer network that is how it has to be for all time. Tesla got around that because they were a new company with no dealer network, even then in some states laws were "updated" to prohibit direct sales.

I see zero reason for such laws to be in the interest of the general welfare. Break up market dynamics to introduce mandated middlepeople? So dumb.

I wonder if the thinking was that dealers have more buying power since they’re purchasing multiple cars from the manufacturer at once, so they are on more equal footing when it comes to negotiating with GM and Ford. Then, since there are multiple dealerships selling the same cars, they can compete with each other on price. Thus, in theory, allowing customers to purchase cars at a price closer to the “wholesale” price.

Of course, once the systems exist, the dealers will lobby for their continued existence.

If dealers really have that negotiation edge they should be able to stay relevant with market dynamics alone, instead of lobbying to prevent direct sales.

Unless the manufacturers undercut the dealers until they're out of business, then raise prices.

Apple still has dealer network with direct sell. But there are so many can’t imagine just manufactures.

The history of why dealership came to be is an interesting one, and why the laws was originally passed was in some way valid

However today dealerships collectively enjoy HUGE state level political power, as in most states the bulk of sales tax revenue is directly tied to the resale of cars, thus the dealers of said cars have out-sized pull in state governments

Being a large source of tax revenue does not imply political power. Campaign contributions do.

Actually, it does. If a large source of tax revenue vanishes, the legislators will need to raise taxes on someone else to make up for it. They would rather not do that, given a choice, because of all the wailing and gnashing of teeth that will result from the people whose taxes go up.

Legislators aren't especially influenced by big tax contributors and the same taxes would be paid by the manufacturer-owned stores anyway. It's just that once the dealer network is created they become a large and highly motivated special interest group. The dozens or hundreds of people that work at each dealership and their families have mostly outnumbered the voters who care strongly about the ability to buy direct, but this has been changing lately.

Dealerships should remake themselves as premium service centers. Taking a Lexus in for service is a pleasure. You can sit in the business center while chomping on "free" donuts and coffee.

Cadillac did try that, they called it the "Pinnacle Project", but the dealers (mostly the smaller ones) didn't want to do it.

I have no idea why you're being downvoted. My dad used to run service departments for a dealer chain, about 15 dealerships. This is one of the things he did. He was also very process oriented and was able to 'money motivate' employees. He took every dealership he worked with from negative or low yearly income to substantially higher yearly income and everything he touched grew customer base.

The VW dealer I bought my e-golf from has been harassing me to do my yearly oil change. And each time I have to tell them that no, my car doesn't need an oil change. They still insist on a yearly "service".

I'm sure these dealerships will invent things that need to be serviced yearly.

Having done a a lot of consulting for car dealerships, I’d wager that it’s more likely that their appointment reminder system is held together by duct tape and baling twine, and getting it to schedule smarter based on the data in the dealer management system is so complicated that it’s probably using default values from when it was first set up 8 years ago.

Oof, so true. Dealer software is stuck in the 90s.

> ...I’d wager that it’s more likely that their appointment reminder system is held together by duct tape and baling twine...

The conventional car industry has coming up on two decades of observing what Tesla did right with their software and customer service experience, and what they screwed up. Tesla is still very vulnerable (QC, capacity, and infrastructure), and that window is closing fast. If conventional car dealerships become economic roadkill in the future, they only have themselves to blame.

The big issue with the traditional car industry is how fragmented it is. OEMs, third party websites, and individual dealerships are not only on different tech stacks, they’re financially independent companies that by and large can’t be forced to work together. It’s not uncommon for OEMs to pay dealerships for data through third party websites, since they lack the ability to share certain types of data directly.

One of Tesla’s advantages is unquestionably their more centralized structure. They can make changes that other OEMs can’t.

It's not engine oil, they want you to come in for a battery oil change.

Headlight fluid too I'm sure.

Clearly people missed the joke.

The lesson here is that rewording a joke doesn't always hit.

Just don’t skip the Blinker Fluid checkups

Or maybe we need smaller or fewer dealerships.

What does it say? Isn't the lower service cost a feather in Tesla's cap when they come up? Who loses those dollars when GM sells an electric Cadillac?

Dealerships are left out in the cold without service dollars.

You said it said something about the brand. Dealers aren't the brand.

Dealers accepting the buyout are them bailing on the brand due to perceived lower long term value of said brand (versus the investment being asked of them). My apologies I wasn’t more clear upfront.

The thesis isn’t just less service required electric vehicles, but Cadillac brand loyalty dying off with older customers (Cadillac has the oldest customer base in the auto industry). Similar situation with Harley Davidson [1].

[1] https://www.reuters.com/article/us-harley-davidson-electricb... (Harley struggles to fire up new generation of riders with electric bike debut)

Cadillac looked dead 25 years ago, too, and managed to rejuvenate the brand with the CTS and Escalade. I wouldn't count them out yet.

It's a small transaction, and GM is on the other side of it, spending money to push the brand towards electric instead of letting it stagnate. Are 150 (likely small volume) dealers a great bellwether?

You could be right. Time will tell as more jurisdictions enact combustion vehicle sales bans and brands transition to electric or die. Single data points aren’t as helpful as momentum signal.

> Are 150 (likely small volume) dealers a great bellwether?

That 150 is 16% of 924 dealerships [1]. About another 30% also sell fewer than a handful of Cadillacs a month.

[1] https://gmauthority.com/blog/2018/01/nearly-half-of-cadillac...

Sometimes the local population can only see into the local future.

Unfortunately, those decisions impact the local grandchildren, who will live in the long-distance future.

It's refreshing to see a singular board room decision lead to a better long-distance future.

Yeah I wouldn’t read too much into this. It’s good for the brand to cull the heard of non-believers.

First, it's a "herd".

Second, 17% is a lot of dealerships. I mean, I presume that these are the dealerships that aren't selling all that many cars, but... what total sales volume did they account for. 5%? 10%? Does Cadillac want to lose that much of their total sales? Do they want to pay money to lose that much of their total sales?

And, really, pay $300,000 for a dealership to go away, because the dealership wouldn't pay $200,000 for a charging station. Why not, you know, put up the $200,000, and keep the dealership?

Cadillac is a sub brand of GM, and most of these dealers probably did small volume on Cadillacs while their bread and butter was GM.

For instance I consulted a group of Ford dealerships, only one of which had a Lincoln franchise. To keep the Lincoln brand they needed to do stuff like have a separate branded entrance and minumum floorspace for the Lincoln side of things, etc. At some point it’s not worth it if 95% of your revenue comes from selling the mainline brand.

I wonder if, at some point, a brand will subsidize those costs just to keep a foot in a market (if they fail to take the bait and cover the cost themselves).

They'd have to pay $200,000 to all dealerships, not just the ones who wanted to leave. Plus I am sure that equipment takes up land/space, and reduces the number of service bays. And requires trained staff.

$176 million is different than $20 million. And that's not the only cost the dealers are incurring including reduced revenue from land that could be used to sell cars.

Because they want to get rid of dealerships. ;)

And, really, pay $300,000 for a dealership to go away, because the dealership wouldn't pay $200,000 for a charging station.

Is a franchise something that a dealer has to purchase up front? If so, maybe it's sort of like property, and Cadillac has to buy it back from them? I believe at least the first part is how some e.g. restaurant franchises work.

> Most dealers who accepted the buyout also own one or more of GM’s other brands—Chevrolet, Buick and GMC—and sell only a handful of Cadillacs a month, the people familiar with the effort said.

Most of these dealerships amount to hobbies or upselling opportunities for other GM brand dealers. This is probably less of a story than it appears.

While incumbent car manufacturers may or may not envy Tesla's technology, market cap, grassroots enthusiasm, et cetera, they so, so, so very much envy Tesla's ability to dispense with a dealer network.

Auto reporters in the past hammered on GM, for example, for its uninspired "badge engineering" i.e. creating nearly identical cars for Pontiac, Chevy, Buick, and so forth. The reality was that GM didn't want to do it — they say it as a big distraction — but the company had to deal with their dealer networks, which would complain loudly if a variant of the latest hot model for some other emblem weren't available for them.

Reading the article, I'm wondering if GM tried to induce as many dealerships as possible to ask for a buy-out. In the age of company-owned and branded stores — Tesla is like an Apple Store for cars — for every product category except cars, GM may be trying to claw its way to controlling the consumer experience for Cadillac, its marquee brand, from soup to nuts.

> Dealers across brands say they are weighing costly facility investments, such as electrical-system upgrades, against uncertainty about demand for the vehicles, which now account for about 2% of U.S. vehicle sales. Some retailers say they are putting off orders of electric models, worried they will sit too long on their lots.

It was probably a bad time to make such a request ($200k investment or sell) in the middle of a pandemic.

Car sales are back up to pre pandemic levels! But yeah I’ll bet there’s lots of folks who are not bringing their cars in for service as much with less commute.

Ford sales down 20%.

But they have the Mach e and Bronco launches coming soon that are really driving people back to them

This probably isn't true everywhere and probably won't be for a while yet.

I think electric is inevitable at this point but I also have my doubts that Cadillac is the brand to bring it to us.

I've got a hybrid and I'm not sure I can ever go back. The mileage is amazing but so is sitting in your car with the AC or heat running while the engine is off. It was also amazing when I left an interior light on while I was camping and ran my 12v battery dead; press a button to recharge.

I do pause at the thought of an all electric because I want to be able to do the long road trips we have in the U.S. I'm willing, however, to spend 30 minutes at stops every few hundred miles, when there are enough of them (which is very nearly now). Range is getting close to what I would need. Say, 300 miles per charge with an 80% charge on a fast charger in 30m. Looks like Tesla already beats that, at least on paper.

Porsche is investing in e-Fuels. The internal combustion engine might not be totally dead. Plus, the EV of the future could be powered by fuel cells, not batteries.

The problem with Cadillac is that GM tries to reinvent it every few years. At this point, no one knows what Cadillac is suppose to be now. If anything, it's on the same path that Oldsmobile and Pontiac were on, ultimately forcing them to shut down the brand.

Not sure why you are being voted down but you are correct about GM doesn’t know how to market Cadillac.

LIt is an iconic name, every US President for the last 70+ years has been driven around in one, yet their ads are so mediocre and their designs are inconsistent. Only brand GM mangers worse is Buick, which stand for what? The people making the ads have no idea.

The people making the ads are only responding to what their bosses want them to do. If the latter have no clue, the ads will be equally clueless.

Plus, the Presidential Limo is just a truck platform with a Cadillac logo on it. I'm sure they can switch to Lincoln, or no badge at all.

Buick is only around now because of its huge popularity in China. https://www.carlblackoforlando.com/blog/why-does-china-love-...

"Porsche is investing in e-Fuels."

Awesome. Maybe they can put CF bulbs in those cars and have a nice collection of lame, dead-end technologies ...

Hydrogen only makes sense for hybrids. BEV with decent range are already available for the vast majority of commutes. The only challenge is covering the last 1% for long distance travel and industrial vehicles where letting them sit idle is not economical. This does require an inefficient solution like hydrogen but it won't be used exclusively.

My wife had her older Prius battery run down years ago. I tried to jump start it in the parking garage but my cables weren't long enough to reach the front. We called AAA.

I didn't think there was any way that the battery for the electrical motor could be used to help the ICE side but https://auto.howstuffworks.com/can-jump-start-hybrid-car.htm says that changed with the Korean hybrids in 2017.

Tesla’s also have a 12v battery as well and if it dies, car won’t work.

Yeah the ioniq/(hyundai kia etc.) is the only hybrid I was aware of with a 12V recharge button like that, that link certainly shows why it can have that.

I was under the impression the prius didn't use the 12v to start the car per se, and there was no starter motor, only MG1 and MG2, where MG1 was doing duty as the starter. I had a motorcycle that did a similar thing, the alternator was the starter.

My understanding is you need it, because the 12v is initially used to run the system computer, and close the hybrid battery relay. Once that happens, the hybrid battery energizes MG1 to start the engine.

Geez, talk about a misleading headline (from WSJ), it's almost click-baity before you read the sub-headline.

It's the kind of title where some people (ok, I) jump to the conclusion that "OMG those climate-hating old-fart car salesmen!".

A better headline would be "...Rather Than Invest to Sell Electric Cars"

headline could have said "dealerships spending more money to sell Cadillacs than they make opt to quit selling Cadillacs."

I saw a hybrid Cadillac ELR on the road the other day. That's damn fine looking car. I predated only 3000 sold 2013–2016?

It really is a beautiful car. But I'm not sure who it's really for - not a big audience.

Before I bought my Volt, I tried finding an ELR. Definitely a finer option, but nearly double the price without rebates. None to be found though.

I am actually surprised any sold at all. Who on earth is paying $75k for a car that is neither fast nor luxurious, and only has two doors? Even at $50k there are much better options out there...

Why did Cadillac need to offer the buyout? Could Cadillac just tell dealers that the chargers are a requirement to keep being a dealer? Could a dealer that doesn’t want to install the chargers reject the buyout and keep operating?

The contracts between GM and the dealership for carrying the brand don't allow either side to make sudden requirements (like installing $200k worth of chargers) without changing the contract - these contracts usually last a long time, so the time for them to renew and require these chargers could be years in the future.

Since GM doesn't want to stagnate on electric cars, they're offering the buyout since they have new electric Cadillacs coming soon and you don't want a dealership to not carry certain cars just because they declined to install chargers.

if what you say is true, what's stopping a dealer from saying no to both options?

I wonder if there is some kind of collective bargaining among dealers in the negotiations with GM, that binds all the dealers. Or if the buyouts are just too good to refuse.

Based on other HN comments it sounds like GM wants to reduce the number of Cadillac dealers because it's GM's luxury brand. Basically they want to imitate Tesla's business model.

These dealers just do Cadillacs as a side gig anyway. They mostly sell other GM brands.

For dealerships spending $200k on upgrades to support EVs has to be a bitter pill to swallow. Fundamentally EVs are lower maintenance, so that big Capex is going to end up with questionable returns.

Taking the payout would have been an easy choice for many, particularly if they could maintain the rest of their Chevy branding.

Cadillac has wanted to get rid of smaller dealers for some time [1]

[1]: https://www.thetruthaboutcars.com/2016/09/cadillac-president...

As stated in other comments, the buyout option may be the real driver of this, but in my estimation, these are the true challenges to mainline ICE selling EVs:

1) battery supply 2) resistance from dealers 3) lack of charging infrastructure

1 and 3 will probably be fixed. #2 may be more intransigent.

So, does Cadillac’s pivot to electric (boy they have had quite a few pivots over the past 20 years…) have much to do at all with North America, or is it for China, which is their largest market for Cadillac?

Seems odd considering a lot of Caddy dealerships are also Chevy or GMC dealerships - and you know those brands have EV vehicles coming down the pipe too.

Archived copy of full article: https://archive.vn/VIHaa

Buyout makes sense for all parties as existing dealers obtain more of the declining cadillac buyer/owner market share.

Maybe this is in the part of the article behind the paywall, but what about GM's other brands? Wouldn't dealerships that sell other electric cars like Chevy Volts require the same sort of equipment? Is there something special about the Cadillac equipment that's more expensive or different than what's needed to service any other GM electric car?

Looks like everybody here has WSJ subscription, and many many other sites.

Well, they let you read the first few paragraphs for free which is what everyone seems to be commenting on.

No idea if the rest of the article says anything interesting.

https://archive.vn/VIHaa This was posted by someone else in the comments.

So the headline is written in a way that I read it as car dealers are being obstinate and not wanting to sell electric cars. Secondly, the deal as I understand it is very similar to one proposed by Johan de Nysschen a few years back just to cull the dealership network and make it more exclusive. (that at the time IIRC most dealerships roundly rejected)

I didnt get past the paywall so maybe it explains better, but I believe the current deal will cost the existing dealers a lot of money to convert over to the new electric format which wont be worth it to smaller dealers or dealers that sell a mix of brands(also usually smaller dealers).

Honestly, it seems like GM is again mishandling its flagship brand and reacting to market conditions instead of trying to steer the market or push technology. They have been doing this for at least 3 decades now, and I dont understand why. Cadillac shouldnt be a volume brand, and they also shouldnt push for profit over everything else. Cadillac should be the GM Halo, with the most R&D and engineering resources creating the tech and engineering that filters down to the volume brands.

Instead they tried to be more BMW and Mercedes Benz than BMW and MB was. They of course failed miserably at that. Some good cars were produced, but they ended up compromised in some way that would make purchasing that over a German competitor pointless. Usually this was in the interior quality which was and remains subpar vs competition.

Next they got 'blindsided' by the switch in consumer preference to SUVs. I dont see how this was ever the case as the Escalade has been their bread and butter since ~2000. From what I understand the CT6 was going to become a RWD platform for a lux SUV(which would have probably been great) but GM got cold feet and instead adopted the C1XX FWD platform which while is serviceable is hardly class leading.

They developed a brand new ICE engine called "Blackwing" that was state of the art. They placed it in the CT6 for about a year only to cancel that car and realize the engine doesnt fit any other platform they make. I cant even fathom how much was lost in that deal.

Ok now they want to go all in on electric, with the only other electric being the tarted up Chevy called the ELR. I suspect that the result will end up being too expensive to recoup development costs, and if past performance is an indicator it will get canceled right as the bugs are worked out and it becomes viable. This is where Cadillac needs to actually commit to really going all in and get the freaking accountants out of the pipeline. Sure building cars is hard and expensive and risky. Cadillac used to be aspirational and forward thinking until the 60s. I suspect they didnt make a lot of money back then either. Of course maybe Im just an armchair quarterback here but from my perspective they are rudderless.

Yeah, they're totally lost and are constantly trying to reinvent the brand. It's hard to see this level of cluelessness and not realize that the brand is likely doomed. For some reason others don't like that interpretation of events.

If I owned a dealership, I'd the take the money and leave. Not because I don't like EVs or whatever. But rather because I know there will be some other, crazy direction change in the future. And everyone of them will be a money losing disaster.

I think you're right. And while I generally find Elons Twitter antics amusing to sometimes headscratching I think he is right about the dealership model. EVs in my totally nonscientific off the head mental model probably require 35-50% of the maintenance of ICE vehicles, so Caddy dealers arent really going to be able to make much money if they go strictly EV. I expect a big shift in how cars are sold in the next 20 years. Where I live in Houston there are hundreds of car dealers, I expect that to reduce by a large percentage when/if EVs take over.

Not to get off topic but vehicle models aside, it feels like you could be talking about Google.

The EV switch for GM seems to have somewhat more thought behind it. Honda is even signed on to share a jointly-developed electric platform for EVs.

Cadillac of sales?

...I’ll show myself out.

"SOCIAL TIPPING POINTS", please read with irony.

If I was a caddy dealer, I'd take the buyout too (and buy $TSLA)

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