About 150 Cadillac dealers accept GM buyouts rather than investing in electric vehicles

DETROIT – About 150 General Motors dealers have agreed to buyouts and will stop selling Cadillacs as the Detroit-based automaker pushes the luxury brand to lead its all-electric vehicle efforts, a person familiar with the details confirmed to CNBC.

GM recently told its 880 US Cadillac dealers that selling its next electric vehicles would cost at least $ 200,000 to upgrade dealerships. The cost includes EV chargers, tooling and training. Such capital expenditures are generally seen as part of the business of large dealerships, but could be difficult for smaller dealers, which Cadillac has more nationwide compared to other luxury brands.

The buybacks mark the most recent indication that GM is stepping up its electric vehicle efforts, which include investing $ 27 billion in fully electric and autonomous vehicles by 2025. This investment, an increase from $ 20 billion dollars announced earlier this year is expected to produce 30 new electric vehicles globally by 2025, including more than 20 for North America alone.

“This forward-thinking product offering must be combined with an exceptional customer experience,” GM said in an emailed statement. “Future dealer requirements are a logical and necessary next step on our path to electrification to ensure our dealers are ready to provide customers with an exceptional experience.

GM expects a majority, if not all, of its Cadillac cars and SUVs sold globally to be fully electric vehicles by 2030.

David Butler, chairman of the National Cadillac Dealer Council, said the board of directors had suggested the buyouts as a way for dealers who might not want to participate in the electric vehicle investment as a way out of their deals. with GM.

“We suggested that the offer is worth it for dealers,” he told CNBC, citing a previous 2016 buyout that failed to attract many Cadillac dealers.

The Wall Street Journal, which first reported the number of dealers taking buyouts on Friday, said GM’s takeover bids ranged from around $ 300,000 to over $ 1 million. Buyouts were largely based on sales and varied depending on the size of the dealership, depending on the company.

The approximately 150 dealerships that accept buybacks represent about 17% of US Cadillac dealers. Dealers had until Nov. 30 to decide on a buyout, according to Automotive News, which first announced the offers last week.