Augusto Amorim, Senior Manager, Americas Vehicle Sales Forecasts

10 August 2020

Can Cadillac become the new Tesla in the US market?

When Cadillac last held a double-digit share of the US Premium Vehicle market, President Barack Obama did not know whether he would be re-elected, Xi Jinping was not yet in power in China and London was still to host the Olympic Games. In 2011, Cadillac accounted for 10.0% of Premium and Super-Premium sales, almost flat from 10.1% in the previous year and down from 12.0% in 2005. Last year, Cadillac attracted only 6.9% of Premium Vehicle buyers, compared with 14.2% for market leader BMW.

Cadillac is convinced that it can change its fate by going electric. To this end, it unveiled the LYRIQ on 6 August. The model will have a range in excess of 300 miles and will boast an augmented reality head-up display. The concept vehicle showcased last Thursday is 80% production ready, according to company officials, but is not expected to hit the market until 2022.

It is an open secret in the industry that Cadillac is striving to be the new Tesla, whose first electric SUV was delivered in 2015.

“Led by LYRIQ, Cadillac will redefine American luxury over the next decade with a new portfolio of transformative EVs”, said Steve Carlisle, GM North America’s executive vice president and president in a recent press release. Note the use of the word “American”.

So, can Cadillac really succeed in this quest?

Its latest attempts at a revival have not been particularly fruitful. From three models in 2015 (arguably just two as the Escalade has two different wheelbases), its SUV offering rose to five models in 2019. Cadillac sold 24,100 more SUVs last year than in 2015, on a total volume of 128,800 units. BMW, meanwhile, went from five to seven SUVs and boosted its volume by 72,700 units in the 2015-2019 period, selling 188,400 SUVs.

In the seven months to July 2020, US Premium Vehicle sales slumped by 19.2% year-on-year. Cadillac’s decline was far steeper, at -27.7%, trailed only by Infiniti on an even weaker performance. Tesla has had a rough year so far (-24.8%), while crosstown rival Lincoln fared better in the year to July, posting a drop of just 6.9%.

The obstacles facing Cadillac are unlikely to be overcome by the release of an electric SUV, however, given its core market of older buyers located largely in the Midwest and parts of the South. This is underscored by the hybrid version of the CT6, sales of which never managed to surpass 3% of the sedan’s overall volume (inclusive of the ICE variant). Not only are electric vehicles more popular in coastal markets and among younger buyers, but Cadillac is widely perceived as an old-school luxury brand. Tesla, on the other hand, is the answer to Silicon Valley’s high-tech aspirations.

We expect the LYRIQ to be the first of seven standalone electrified vehicles launched by Cadillac between 2022 and 2027, combined volumes of which are forecast to reach about 40,000 by the early 2030s. This contrasts with sales of 120,000 units for Tesla’s Model 3 in its first full year of sales (2018).