GM abandons Cadillac dealers that can’t compete with Tesla – Quartz


Cadillac dealers need to quickly wean themselves off gasoline vehicles. Rory Harvey, the company’s global vice president, told Reuters that the General Motors-owned brand expects to have just 560 dealerships in the United States by the end of the year, which is a significant 40% decrease from three years ago.

The loss of Cadillac dealers comes as GM seeks to make the most, if not all, of the brand’s electric offerings by 2030. The transition to electric vehicles is estimated to cost each Cadillac dealer $ 200,000 to $ 500. $ 000, and GM has spent $ 274 million to buy out dealerships that aren’t ready to make the switch. Unlike traditional car brands, Tesla does not rely on franchised dealerships, but sells cars directly to customers.

GM is one of many automakers trying to catch up with Tesla

For years, automaker Elon Musk has dominated the electric vehicle market, accounting for around two-thirds of battery-electric vehicle sales in the first half of this year. Tesla, Chevrolet and Ford together represent about 80% of the US market. But Tesla’s market dominance hasn’t stopped other brands from trying to catch up. On the contrary, Michelle Krebs, analyst at Cox Automotive, told Quartz that the electric vehicle maker “really pushed its competitors into the game from the start.”

For GM, that meant committing to release at least 30 electric vehicles by 2025, including Cadillac’s Lyriq 2023, which sold out in 10 minutes when it hit the market in September. GM CEO Mary Berra told CNBC in October that she believed the company could “absolutely” catch up to Tesla in electric vehicle sales by 2025.

But not all U.S. dealerships are equally enthusiastic about the transition to electric vehicles, and some have expressed concerns that their profit margins will decline if they switch to electric cars, as service charges tend to be. lower. A 2019 analysis by consulting firm AlixPartners found that adopting electric vehicles could cost dealers $ 1,300 in service fees over the life of every battery-powered electric vehicle they sell.

Even if dealerships decide to invest in electric vehicle certification, customers are still not adopting electric cars fast enough for them – electric vehicle sales still represent less than 2% of overall auto sales in the United States. United.

US heading towards EV transition

Cadillac’s decision to buy out dealerships highlights the relative impatience of manufacturers and the intransigence of traditional sellers. Neither has a choice, however: US President Joe Biden has said he wants half of new vehicles to be electric by 2030, and the $ 1 trillion infrastructure package dollars passed by Congress on Nov. 5 includes $ 5 billion to expand EV highway charging infrastructure.

The transition will change almost every aspect of the American auto industry. But while there will certainly be an impact on dealerships, they also employ more Americans than any other department in the auto industry, and they’re unlikely to become obsolete anytime soon.

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