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
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.
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.
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.
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.
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?
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.
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.
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.
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.
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
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?
> 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.
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.
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.
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.
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.
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.
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...
Readit News
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
> Most dealers who accepted the buyout ... sell only a handful of Cadillacs a month.
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.
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.
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.
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?
I'd rather they setup a charging setup at homes or residential areas.
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.
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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?
That's 970 dealers after culling 400 Cadillac dealers during their bankruptcy, btw.
Dead Comment
> 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?
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.
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
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.
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?
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.
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.
It was probably a bad time to make such a request ($200k investment or sell) in the middle of a pandemic.
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.
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.
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.
Awesome. Maybe they can put CF bulbs in those cars and have a nice collection of lame, dead-end technologies ...
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.
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.
Deleted Comment
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"