Exclusive: GM cancels Cadillac plug-in hybrid: sources

DETROIT Fri May 27, 2011 6:54pm EDT

A Cadillac SRX is displayed during the first media day of the 79th Geneva Car Show at the Palexpo in Geneva March 3, 2009. General Motors has canceled plans to develop a plug-in hybrid vehicle based on the current Cadillac SRX crossover platform after deciding that the project was not financially viable, three people with direct knowledge of the project said. REUTERS/Arnd Wiegmann

A Cadillac SRX is displayed during the first media day of the 79th Geneva Car Show at the Palexpo in Geneva March 3, 2009. General Motors has canceled plans to develop a plug-in hybrid vehicle based on the current Cadillac SRX crossover platform after deciding that the project was not financially viable, three people with direct knowledge of the project said.

Credit: Reuters/Arnd Wiegmann

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GM pulls the plug

Fri, May 27 2011

DETROIT (Reuters) - General Motors Co has canceled plans to develop a plug-in hybrid vehicle based on the current Cadillac SRX crossover platform, deciding the project was not financially viable, three people with direct knowledge of the project said.

While two of the sources said the plans could still be revived on a future platform, they and two others familiar with the matter said engineers involved had been reassigned to other projects.

The Cadillac plug-in shared much of the same technology that GM developed for its battery-powered Chevrolet Volt, which has been the centerpiece of the automaker's effort to convince consumers of its turnaround after its bankruptcy and government bailout in 2009.

Reuters spoke with six people about the GM decision. They could not be named because the project was never made public by the company. GM officials declined to discuss the company's plans.

"I'm not going to comment on specific products or timing for applications, but we still see promise in the technology," GM spokesman Kevin Kelly said.

Reuters reported in December that GM was working on the Cadillac hybrid crossover, citing people with direct knowledge of the work. In January, GM Chief Executive Dan Akerson said the introduction of the plug-in hybrid was "likely."

But over the past two to three weeks, engineers and others working on the program were told the program was on hold. As recently as this week, GM sent participants cancellation e-mails and thank-you notes, two sources said.

Since becoming CEO in September, Akerson has driven GM more aggressively toward electric vehicles, a strategic area where he has left a mark, executives have said.

The push has centered on rolling out the plug-in hybrid technology GM developed for the Volt in a broader range of vehicles to recoup the company's investment more quickly.

GM's push into electric vehicles also is aimed at seizing the green mantle Toyota Motor Corp earned with the roll-out of its popular Prius hybrid vehicle. In the United States alone last year, Toyota sold almost 141,000 Prius hybrids. GM recently boosted its 2012 production plans for the Volt by a third to 60,000 vehicles.

'A BETTER MOUSETRAP'

The Cadillac plug-in was drawn from an abandoned project to launch a rechargeable crossover vehicle that GM considered in 2008 and 2009 under the Buick and since-scrapped Saturn brands, three people familiar with the project said.

GM had developed prototypes of the luxury hybrid that were being tested on the company's proving grounds, three sources said.

The plug-in would have been based on the current SRX platform, which is two years old. In the auto industry, the life cycle of a platform, which dictates the size and body construction of a vehicle, is typically about five years.

By the time the Cadillac plug-in was ready for production, the platform would have been nearing the end of its life, adding to the costs of developing the vehicle, two sources said.

The costs of the program were already high, and the vehicle was expected to lose money, two people with direct knowledge of the program said.

GM has made engineering advances since the program was initiated, so it made more sense to focus on the next platform with the improved, more cost-efficient technologies, one source said.

"If you're this far along on a program and you find a better mousetrap through engineering, should you continue on with something that may not be the most benefit for the customer or should you maybe shift your thinking?" the source, who has direct knowledge of the program, told Reuters.

Three people familiar with the plan said parts shortages after the March 11 earthquake and tsunami in Japan also plagued the program, but played only a minor role in GM's decision to cancel it.

The earthquake, which triggered disruptions in the flow of key electronics to automakers worldwide, caused a shortage of microprocessors used in the luxury hybrid's internal battery charger, two of the sources said.

But two other people insisted the parts shortages played no role in GM's decision.

GM has said that "extended-range electric vehicle technology" will be more popular with consumers than pure electric vehicles because of the additional range provided by the traditional internal combustion engine.

The Volt has a 400-pound lithium-ion battery to provide an electric-only range of 25 to 50 miles. After the battery is depleted, a 1.4-liter gasoline engine can power the car for nearly another 350 miles.

(Reporting by Ben Klayman and Deepa Seetharaman; editing by John Wallace)

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