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Elmiraj: How Cadillac Could Give Tesla a Run

Stocks in this article: TSLA AAPL MSFT GM

Let's get one thing out of the way first: Everyone seems to agree that the Elmiraj is among the most beautiful automobile creations we have ever seen. The exterior looks 100% production-ready, too.

In concept-car form, the Elmiraj is based on a conventional type of drivetrain: A 4.5 liter V8 up front, driving the rear wheels. This is supposedly what will form the basis for Cadillac's largest sedan a year or so down the road.

If the Elmiraj makes it into production like this, the automotive press will cheer. However, the automotive press consists mostly of old farts whose passion for automobiles was formed around the time of Steve McQueen's 1967 Bullitt. That's when car tech meant 8-track tape decks.

The problem is that while a 4.5 liter V8 Elmiraj will cause the automotive press to cheer, they are fighting the last battle. Actually, more like three battles past, sort of like Vietnam.

The other problem is that while the Elmiraj competes for being the most stunning automotive design to date, it will not sell in Silicon Valley. With the rest of the world looking like Silicon Valley in three to five years, that's a problem.

Cadillac needs to skate to where the puck is going, not where it has been since 1967 -- or 1907 for that matter. We simply cannot rewind the clock to the flip-phone era and think that we can compete with iPhone and Android.

The good news for Cadillac is that it has all the resources to fix this problem ASAP. GM (GM) is selling both pure electric cars (Chevrolet Spark EV) and range-extended electric cars (Chevrolet Volt). Cadillac's coupe version of the Volt -- the ELR -- enters production the week after Thanksgiving this year.

Much of Tesla's market cap today can be ascribed to the scarcity value of offering the market's only large luxury electric car. If Cadillac decided to build the Elmiraj on a beefed-up Volt/ELR platform, it would likely punctuate several billions of dollars of Tesla market cap -- and perhaps add a few billion to GM's own market cap.

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