GM board approves plug-in Cadillac hybrid

The board of General Motors Co has approved a plan to produce a plug-in hybrid for the luxury Cadillac brand that will adapt technology developed for the upcoming Chevrolet Volt, according to people briefed on the decision.
The battery-powered Cadillac will be based on the Converj concept GM showed off in January and would become the second extended-range plug-in vehicle in GM's line-up after the Volt, which is set to launch at the end of 2010.

GM's 13-member board approved production of the new Cadillac at a regular meeting last week in Detroit, according to the sources briefed on the action. They asked not to be named since the decision has not been announced.

Production of the Cadillac is not expected before the 2013 model year, two years after the Volt's launch.

The Volt has attracted intense interest as one of the first rechargeable, battery-powered vehicles set to launch in the United States.

But GM officials have also downplayed expectations for the Volt's commercial success because of the vehicle's high development costs, high sticker price and limited production.

From the start, executives involved in the Volt development effort have said GM's goal would be to find ways to create spinoffs that would help the automaker recoup its investment.

The Volt is set to go on sale in late 2010 in the United States and later in Europe. GM hopes to sell 10,000 Volts the first year and 60,000 in the second year.

The Volt is expected to cost about $40,000 before a consumer tax rebate of $7,500 in the United States. Even after the rebate, the Volt would be about $10,000 more expensive than the market-leading Toyota Prius hybrid.

GM wanted to show that the electric car technology behind the Volt was ready for the mainstream when it chose Chevrolet as the brand for the vehicle's launch.

Some analysts, however, have said the luxury Cadillac brand would have been a better fit for the Volt because premium car buyers could prove more willing to pay the higher prices the new technology will require.

"In many ways it makes more sense for Cadillac rather than Chevrolet," said Erich Merkle, auto industry analyst and founder of Autoconomy.com.

The Volt is being designed to be able to charge at a conventional household outlet and travel up to 40 miles on battery power. When its lithium-ion battery is run down, a small gas-powered engine will start to recharge the battery.

GM's extended-range electric vehicle technology will face competition from both pure electric cars and traditional hybrids led by the Prius.

Nissan Motor Co will introduce the Leaf sedan in late 2010, an all-electric car with a range of about 100 miles.

In a departure from past practices, GM's new board is being briefed on product development plans earlier in the cycle and has become far more active in vetting that investment, the sources briefed on the board decision said.

Led by Chairman Ed Whitacre, the new GM board was reviewed by the U.S. Treasury after being restructured in bankruptcy with $50 billion in U.S. taxpayer funding.