Electric Cadillac Escalade to Test GM’s EV Strategy, ATM

NEW YORK – General Motors on Wednesday, a new all-electric version of the Cadillac Escalade will test the luxury SUV’s prestige for a new era of drivers and the company’s strategy to turn its most lucrative vehicles into money-making EVs.

GM CEO Mary Barra and other executives have promised Wall Street that the automaker’s new electric cars will be profitable, targeting EV profits comparable to gas-powered models in the middle of the decade and annual EV revenue of 90 billion dollars until 2030.

But slower-than-expected electric car launches, high raw material costs and emerging concerns about consumer acceptance have some doubting the automaker’s ability to achieve the scale it needs to achieve such goals.

The all-electric Escalade “IQ” will be a key proof point to reassure investors.

The Escalade IQ is the first – and most important – traditional Cadillac model to be released as an electric car. It is set to eventually replace the current gas and diesel powered vehicles, unlike Cadillac’s Lyriq and Celestiq electric cars which represented new entries for the brand.

“The Escalade is one of the GM cars. It’s the sweet spot for their image and profitability,” said Tyson Jominy, JD Power’s vice president of data and analytics. “It really defines the Cadillac brand. On top of that, it’s an extraordinarily profitable brand for General Motors.”

Cadillac plans to sell exclusively fully electric vehicles by 2030, making it GM’s luxury EV brand. Investors will be watching to see how, or if, the automaker can also transfer the Escalade’s high profit margins — estimated at upwards of 30% — to the EV models.

Cadillac vice president John Roth declined to discuss the Escalade’s profit margins but said the vehicle “certainly carries its fair share” for the brand. Current models start from around $81,000 to $150,000 for a limited edition performance variant.

The EV version is expected to be priced towards the upper end of that range. GM declined to comment on pricing ahead of the vehicle’s unveiling Wednesday in New York City.

“When you make your franchise player an electric car, you’re sending a statement to the world that Cadillac is all electric,” Roth, who began his current position in June, told CNBC.

The Escalade SUVs, including a larger “ESV” model, are among the most expensive vehicles purchased by American consumers.

Auto insights company Edmunds reports that the average transaction price for an Escalade was $115,500 in the first half of this year. That puts it below the industry-leading Mercedes-Benz G-Class SUV at more than $202,000, but above nearly 300 other vehicles, excluding exotics such as Ferrari and Lamborghini.

Sales of Escalades have grown in importance for the brand, representing upwards of 30% of Cadillac’s US sales in recent years. GM says it has sold more than 1 million Escaladers globally since the vehicle was introduced in 1998, a large majority of which have been sold in the U.S.

“The introduction of the Escalade gave Cadillac a flagship. Realistically, over the years, the Escalade has become an icon,” Michael Simcoe, GM’s global design director, told CNBC. “It has earned and deserves its position as a true luxury vehicle and the pinnacle of the Cadillac lineup now.”

GM has dubbed the Escalade IQ, which is expected to share little to nothing with the traditional models “reinvention of an icon”, rather than a substitute for now.

The automaker plans to initially sell the new electric Escalade IQ alongside the current traditional models.

Rory Harvey, who previously headed Cadillac before becoming head of GM North America in June, described the strategy as “a great proposition in terms of having the two variants” that allow the company to better juggle production with demand.

The electric Escalade will be produced at a Detroit plant along with EV versions of the GMC Hummer, Chevrolet Silverado and Cruise Origin. The vehicles all share GM’s new “Ultium” vehicle platform, batteries, motors and other components.

The traditional Escalade will continue to be built at GM’s Arlington Assembly in Texas, along with full-size SUVs from Chevrolet and GMC that share a vehicle platform and other components with the Escalade.

A teaser video released by GM of the Escalade IQ appears to have more design elements similar to the automaker’s Cadillac Lyriq and Cadillac Celestiq than the traditional Escalade. The vehicle features an illuminated grille, vertical headlights and a potentially softer exterior.

Simcoe, who has been with GM for about 40 years, said the goal of the IQ was to build on the Escalade’s reputation without infringing on the current internal combustion engine (ICE) models.

“The intent is not to take anything away from the ICE Escalade … and that’s one of the challenges. How do you make a vehicle as good as that and then up your game,” he told CNBC.

But the Escalade means more to GM than just profits.

The vehicle has grown into a status symbol, highlighted in hundreds of songs, TV shows and movies for the rich, stylish and powerful.

Such appearances helped the early adoption of the vehicle, according to Wayne Cherry, a former GM design chief who oversaw the first-generation Escalade. That led to GM increasingly differentiating the Escalade from its GMC and Chevrolet sibling SUVs even though they largely share the same mechanical components.

“I think the design evolution has been excellent. It continues to look distinct and recognizable and has evolved extremely well with the advancement of technology,” Cherry said in an email.

GM regularly uses the Escalade to debut new technology and design features that then trickle down to the rest of the Cadillac brand or other vehicles in GM’s lineup.

Ivan Drury, senior manager of insights at Edmunds, believes the Escalade IQ could continue such trends for a new generation of Cadillac buyers, without the gas-guzzling stigma.

“The vehicle exudes opulence. It’s meant to say, ‘I don’t care about the following things, including being environmentally conscious or friendly,'” Drury said. “But the thing about IQ is that you can potentially get all these new eyeballs… It’s something that really brings new life to the brand.”