Cadillac ELR: Here's The Chevy Volt 2.0, Due Jan. 15

NEW YORK ( TheStreet) -- Tuesday morning, General Motors ( GM) notified the world it will be unveiling the Cadillac ELR in Detroit on Jan. 15.

It enclosed a semi-blurry picture confirming the spy photos that have been circulating over the last year.

It is expected the Cadillac ELR will enter production in the second half of 2013, more likely the fourth quarter than the third. It should be in showrooms by January 2014, perhaps earlier. I estimate the price before tax adjustments will start at $47,400.

How will the Cadillac ELR differ from the current Chevrolet Volt?

1. It's a two-door coupe, with dimensions otherwise similar to the current Volt. This means the rear seat room will be even smaller than the current Volt. In the Volt, two adults who are 5'11" can sit comfortably, even though there is no extra space -- but they fit sitting straight up, which you can't say about many other compact cars.

In the Cadillac ELR, the rear headroom looks to be constrained, so I suspect that you would have to be meaningfully shorter than 5'11" in order to fit comfortably. Add the inconvenience of only two doors, and the reasonable practicality of the Volt has been compromised. Luggage space is estimated to be similar to the Volt, which is to say acceptable.

2. The dashboard and interior will be better than the Volt. From the leather seats to the knobs, dials and the displays there will be obvious advancements here. Given the learning curve as well as Moore's Law, it may even be cheaper to assemble. So if you are strictly two people and you don't need the rear seat access, the Cadillac ELR will represent a strong improvement.

3. Powertrain: This is the biggie. The ELR likely has obtained an evolved Volt drivetrain, breaking into the following parts:

A. Battery: Capacity will be 16 kWh, because that's where the tax benefits max out ($7,500 Federal tax credit). However, the actual battery will at a minimum be cheaper to manufacture, and it may have an improved cooling/heating system. It will likely be lighter, and it may be slightly smaller.

B. Gasoline generator: It will most likely be beefier than the current 1.4 liter derived from what is in the Chevy Cruze. Rumors have suggested a 2.0 liter engine, and this sounds reasonable.

C. Electric motor(s): It will likely be beefed up from the current 111 kW (main traction motor) and 55 kW for the generator-motor. This is what determines acceleration, so it will be needed in order to differentiate from the Volt.

D. Transmission: Most likely, it will remain unchanged in principle from the Volt. It may be modified in some direction, but GM has a lot invested in this architecture, and it seems to have performed superior to the competition in the real world, with approximately 50,000 Volts manufactured for world-wide consumption, and some 40,000 sold world-wide to date.

E. Electric range: The Volt averages 38 miles. The refinements in the Cadillac ELR, in combination with the greater power, should keep that approximately the same, with a tiny increase possible.

F. Gasoline performance: The Volt manages 35-40 miles per gallon, according to the Environmental Protection Agency. Unlike some of the well-publicized competition, owners appear to be at least meeting, and typically beating, those numbers, especially in non-freezing climates. The ELR could improve on this further, possibly to around 45 mpg.

G. Gasoline range/tank: The current 9.3 gallon in the Volt has proven to be more than plenty for most people. I imagine they will keep it around nine gallons, but I wouldn't be surprised if they decided to shrink it to seven to eight gallons, or even less. It's just not needed.

3. Thermal management - for the passengers: The Volt has poor heat and windshield defrost. This will need to change in the ELR.

4. NVH (noise, vibration and harshness): Much improvement expected here, over the Volt. Compared to the Tesla Model S, the Volt has too much vibration and noise coming from the wheel wells and suspension in general.

5. Profitability of manufacturing: GM's profit on the Cadillac ELR should be improved by thousands of dollars compared to the Chevrolet Volt. Why? Mostly because of the lower-cost -- but better-performing -- battery. This is the single most important component by far, with the whole battery pack cost approaching $10,000. If you can cut this in half, that's $5,000 right there.

Now for the bad news. Let me preface this by saying this that I am the biggest fan in the world of the Volt. I have driven the Volt 20,000 miles and recommend it to everyone for whom the size of the car fits their needs.

The Cadillac ELR will be a wonderful car -- for a two-door coupe. Here is the problem: I don't hear a lot people asking for two-door coupes. When people buy or see the Volt, they want the next car in the Volt family to be a minivan or SUV. Tesla has understood this with the Model X minivan, which will enter production only a month or two after the Cadillac ELR.

Ninety-five out of 100 people with whom I speak about the Volt say they want a six- or seven-passenger Volt in minivan or SUV format, and with a lot of luggage space. They want a much taller car, so that an elderly person can slide into it without having to sit down as if crawling down into a Corvette. They want bigger doors.

I have absolutely nothing against the Cadillac ELR. What GM should have done before the ELR, however, was to make a much longer and taller version, with three rows of seats, even with a center tunnel that would make it a two+two+two-seater for a total of six people. The car would be at least a foot taller. The battery size could stay at 16 kWh, and consumers would be prepared to pay whatever it would cost -- $59,900, whatever.

The problem with the Cadillac ELR is not in the execution of the engineering. I'm sure it will be flawless and be the leader in its class. The problem is that it is a small class. What is the market for a $47,400 (and up, before tax incentives) two-door coupe? I imagine no more than 1%-3% of the market.

On the other hand, the market for a three-row, six-seater version in SUV/minivan format would be a lot larger than 1%-3% of the market. As it stands, the Cadillac ELR does not expand the market much beyond the Chevrolet Volt, which is so good as it is.

One really has to wonder: Who at GM was responsible for the product planning of this? Does GM not speak to real people, including the existing Volt owners, asking them what other car they would like to buy?

Why is it that almost everyone one I know are praying for a "Volt" minivan or SUV, but GM runs off and makes a two-door coupe with tiny interior space? There is place in the market for a whole family of Volt minivans and SUVs in different sizes -- from six to eight passengers, from a lot of luggage space, to giant spaces -- but the room in the market for a two-door coupe is likely very small, especially considering the Volt is already in the market and is more practical.

I look forward to driving the Cadillac ELR in 2013, but what so many people in the market are clamoring for is the same drivetrain in a much taller car that can fit at least six people and a lot of luggage. Think Dodge Caravan or Chevrolet Suburban -- with the Volt/ELR powertrain.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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