The cost of progress?

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I was scrolling through my Google news aggregator the other day and a story popped up which piqued my interest. Usually my feed is filled with stories about crypto, or gaming, or whiskey, but on this occasion it was a business article about an industry that is somewhat near and dear to me.

If you grew up in Michigan, there is a very high chance that either you, a relative, or at least someone you know works in the auto industry. Maybe they work in a dealership, or more likely, they are an autoworker in one of the many plants owned by GM, Ford, and Chrysler across the state.

My dad was an autoworker for 30 years, my uncle and grandfather as well. My father in law, my wife's aunt, one of my good friends... you get the idea.

This article had to do with Cadillac and a recent decision by them concerning their electric vehicle line. Like @steevc and @bigtom13, I have a bit of an interest in the advent and evolution of electric vehicles (EV), so after a quick glance I gave it a deeper read.

Disclaimer: Besides being a GM company (which makes it special), I have no great love for Cadillacs. I have never owned one (I like my Buick), and if I were to move up to that next level of luxury, I would probably go with a Lincoln. I think they look cooler, but that is a discussion for another time (Donnie Brasco anyone?).

So anyway, here is the basic run-down:

Back in September, the 880 Cadillac dealers across the United States were told that they needed to invest $200,000 to transition their dealership to sell the yet to be released EV's. They were given until the end of November to decide if they wanted to invest in the transitions or take a buyout and no longer be a Cadillac dealership.

When I first glanced the article I was a bit surprised by the $200,000 price tag for the transition. After reading I realized that capital was being used for purchase and installation of charging stations, employee training, and apparently, the batteries in these vehicles are very heavy, so they need special lifts to move them around.

With dealerships spread all across the country, many of them fall in relatively rural areas. You know, places where people are more likely to buy a luxury combine or tractor than an Escalade. It is largely those smaller dealerships that decided to take the buy out.

About 150 of them in fact.

By all rights, they probably came out ahead on the deal. With lower sales of these luxury vehicles, the $300,000 to $500,000 buyout they got probably covers more than their average annual turnover of Cadillacs. Plus, as you have probably notice, most dealerships carry more than one brand of vehicle, so they will probably be just fine.

For example, the closest Cadillac dealership to me is also a GMC dealer. Who loves a good pickup truck more than those rural folk?

This does lead one to consider if the cost of "progress" or "environmental consciousness" is worth the price to be paid.

In terms of the environment, I think yes. As for progress, who knows. There is a good chance many of these small town dealerships are family owned through several generations. For businesses whose identities have potentially become synonymous with Cadillac, only time will tell the impact this move may have on their future.

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11 comments
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When a technology is relatively new it is costly how it has happened with many things in human history.

But you'll see how much cheaper an electric vehicle will be in about 10 years.

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I hope so! We need more environmentally friendly options that the general public can afford.

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I find it interesting that some of those big US brands have practically no presence in Europe. Some models must be almost entirely for the US market. I think just about all manufacturers operating here have electric models now and so dealers have to be set up for them. That will have costs for the dealers. In theory EVs should need less servicing and servicing is a large part of their income. They charge a lot more than independent places. The motors are more or less sealed units. There is no oil to change. It will shift the economics of the industry.

I really don't know when I will get another car. I hardly need to drive these days. My son is the main user of one car now as he is working. We don't do huge mileage between us. Maybe when one of the cars reaches end of life we will look into the electric options. That may involve leasing. With the changing technology it may be worth not committing to anything for the long term. Generally we run our cars until they die :)

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Yes, I think there are different models for the different areas. I know that you folks have some specific models that I have never heard of before. I am guessing part of it just has to do with the large distances that you have to cover to get anywhere over here. An electric car might take you through several countries on one charge over there, but might not even get you out of the state here. That sounds like a smart idea to lease due to the evolving technology. I am not usually one to lease vehicles, but it seems like the better play at least for now.

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Not a fan of Cadillac, but I wouldn't mind an Escalade or a CTS. The only American car that I drove though was a 2001 Chevrolet Tahoe. Big, noisy, thirsty, comfortable, but expensive to maintain in Europe.

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Yeah, that is a bit of a beast. I have a GMC 2500 and it drives like a tank. It is pretty huge. I tows my trailer well, so I don't really mind. The fuel economy is horrible!

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When a technology is relatively new it is expensive how it has happened with many things in human history.

But you'll see how much cheaper an electric vehicle will be in about 10 years.

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Disclaimer: As far as Detroit goes, I'm a Ford guy with Dodge second.

I don't think the $200,000 is out of line for a dealership just going to EVs. Not a one of those that took the buyout were a sole dealer (Cadillac only) so they are going to need to put some money in the dealership to accommodate EVs anyway. I'd guess that every one felt that Caddy was marginal to their overall profitability.

My friend Ray got a job after the Army (Korea) hauling cars between Kansas City and LA. He worked for two brothers that owned a dealership in each city. GM insisted on a ratio of Cadillac to other brands, no exceptions. They couldn't sell many Caddys in KC and could sell them all in LA so they hauled back and forth. Ray knew Route 66 better than most :)

There is no doubt in my mind that Tesla has bulled the market into everybody needing an EV to be competitive. I'm sure Caddy would have preferred a 'phase in' sort of process but...

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Haha, that is a pretty funny story. Really smart on their part! I am a Chevy/GMC guy for the most part. It is going to be hard since Buick isn't making cars anymore (none of them are really). That might push us into Lincoln territory for our next car. My wife might even get her Wrangler she has always wanted...

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