Why General Motors Is Importing Hybrid Cadillacs From China

By Markets Fool.com

The 2017 Cadillac CT6 Plug-In Hybrid will arrive at U.S.dealers next spring. Image source: General Motors.

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General Motors (NYSE: GM) took the wraps off a new plug-in hybrid version of its big Cadillac CT6 sedan on Tuesday.

The CT6 Plug-In Hybrid (that's the official name) will go on sale in the U.S. in the spring of 2017. And in a twist that might (or might not) have some interesting political implications, the new plug-in Cadillacs will be imported from China.

About the 2017 CT6 Plug-In Hybrid

GM said that the new CT6 Plug-In Hybrid has two electric motors along with a 2.0 liter turbocharged four-cylinder gasoline engine, making total system power of 335 horsepower. The motors and engine work together with an all-new "rear wheel drive electric variable transmission" to produce what brisk acceleration: zero to 60 miles per hour in 5.2 seconds, GM estimates.

And that kind of gets to the point of this model: At least for the U.S. market, GM seems to be emphasizing the "hybrid' side of the equation rather than the "plug-in" side. The CT6 Plug-In Hybrid's all-electric range is a modest 30 miles, but GM talked up its "total driving range" of over 400 miles and its expected 65 miles-per-gallon-equivalent (MPGe) rating.

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The new hybrid obviously shares a great deal with the gasoline-powered CT6. It's a big and plush luxury sedan with unusually good handling for its size, thanks in large part to some advanced construction techniques that make it considerably lighter than its similarly sized German-brand rivals. That lighter weight is a factor in the good acceleration of the hybrid version, too.

This cutaway photo shows how the hybrid's battery packs are installed inthe CT6's frame. Image source: General Motors.

The 2017 Cadillac CT6 Plug-In Hybrid will have a starting price of $75,095, and a trim level comparable to the current "Premium Luxury" version of the CT6, when it goes on sale in the spring.

Why is it coming from China?

As first reported by the Detroit Free Pressin January, and subsequently confirmed by GM, the plug-in version of the CT6 will be imported from China. It will be built alongside other Cadillacs intended for the Chinese market in a new high-tech factory near Shanghai.

All the other CT6s intended for the U.S. market are built in GM's advanced Detroit-Hamtramck Assembly Plant in Michigan. That plant also builds the plug-in Chevrolet Volt. So why can't it build the CT6 Plug-In Hybrid?

I suspect that it could. But I think GM decided that it wasn't worth the cost of tooling up its "D-Ham" plant to make the hybrid Cadillac, because sales volumes in the U.S. are likely to be very low. Low gas prices have made hybrids a tough sell here recently.

That leads us to the "secret" behind the CT6 Plug-In Hybrid: It was developed for China first and foremost. And it's about pollution rather than fuel economy. Several Chinese cities have imposed aggressive policies to fight smog that limit access to the city centers to electrified vehicles only during certain times. The CT6 Plug-In Hybrid's ability to run in battery-only mode should grant it access -- without the costs or hassles of an electric-only model.

Will Americans buy a Chinese-made Cadillac?

Well, they're already buying a Chinese-made Buick. The CT6 Plug-In Hybrid will be the second GM product to be imported from China to the U.S. The first, the Buick Envision crossover SUV, caused a bit of a fuss in the media when GM first announced that it would be built in China -- but it has sold well since its U.S. debut earlier this year, and most buyers don't seem to care.

The Buick Envision is selling well, hasreceived strong reviews -- and is imported from China. Image source: General Motors.

The question is whether the idea of a Chinese Cadillac will catch the attention (and ire) of the incoming Trump Administration. During the presidential campaign, Donald Trump regularly called out Ford Motor Company's (NYSE: F) decision to build a new factory in Mexico.

Of course, lots of automakers have factories in Mexico, and roughly 2 million vehicles are imported into the U.S. from Mexico every year. But that said, importing autos from China is still very much a new thing. I suspect it won't be a big deal, if only because the CT6 Plug-In Hybrid is a niche product, the total sales numbers are likely to be small, and GM's high-tech Chinese factory seems fully capable of delivering competitive quality.

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