The CTS had to beat out two of its biggest rivals, the similarly all-new BMW (NASDAQOTH:BAMXF) 5-Series, and Mercedes-Benz E-Class, to take the prize. That makes it an extra-special win for GM, which has invested a fortune in its quest to make Cadillac a true rival of the German luxury brands.
But the CTS's victory calls to mind a comparison -- with last year's Car of the Year, Tesla Motors' (NASDAQ: TSLA) hot Model S.
Can this Cadillac really be compared with the Tesla?
The easy argument to make is that the Model S represents the future, and the Cadillac represents the past. After all, few automotive names say "big huge gas guzzler" like "Cadillac," right?
But the reality isn't so simple. It's true that the Model S is an impressive achievement -- a competitive luxury sedan that happens to also be the best-yet all-electric vehicle.
But the CTS, which is hundreds of pounds lighter than its rivals, thanks to some advanced construction techniques, and which offers several high-tech engines, is hardly a gas-guzzler.
Electric cars might turn out to be the future, it's true. But right now, many buyers -- most buyers -- aren't ready for an electric car... at least not yet.
Here's some context: Tesla hopes to sell 21,500 electric cars this year. That number has wowed investors. But GM sells almost three times as many gasoline-powered pickup trucks every single month in the U.S. alone. It's still a gasoline-powered world.
And in that world, the CTS also ranks as an impressive achievement. Here's why.
It's time to take GM's Cadillac revival seriously
I have yet to drive a 2014 CTS, so I can't compare it firsthand to other cars. But consider this: A wide range of experts, from Motor Trend to Consumer Reports, have put the new Cadillac through its paces -- and pronounced it at least equal to its German rivals.
Motor Trend praised the CTS's "elegant" interior, its "absolutely fantastic" chassis, its class-leading performance, and its overall refinement. In summing up, it said the CTS "demonstrated superior advancement in design, performance, handling, and experience" over the (also all-new) BMW and Mercedes.
For General Motors, that's huge. Turning Cadillac into a true global luxury brand is a daunting task, given the quality of the competition -- and given Cadillac's history, which, at least in recent times, isn't exactly distinguished. But it's crucial to GM's growth as a global company.
The job is far from done and, in truth, it will take years -- and more vehicles that are at least as good as this CTS. But the first step in making Cadillac a brand that luxury buyers take seriously is to make products that can go head-to-head with BMW, Mercedes, and Audi -- with no excuses.
The compact ATS sedan that GM introduced last year was the first Cadillac to make that grade. Reviewers are saying that the new CTS might be worthy of even higher marks.
GM still has a lot of work to do with the Cadillac brand, and that work will take years. But the quality of the CTS shows that GM has figured out how to produce vehicles that can compete with the world's best, and win.
Given GM's recent history, and the hard efforts made by CEO Dan Akerson and his team to write a new chapter for America's biggest automaker, that absolutely ranks as an impressive achievement.
But how does it compare to Tesla's?
Tesla deserves big praise, but so does GM now
It's hard -- very hard -- to compete at the top level in the global luxury-car race. Mercedes and BMW and Audi have been at this for a long time, and have built enviable reputations. One could argue that even mighty Toyota (NYSE:TM) hasn't quite gotten there with its Lexus brand.
But both of the cars we've discussed, Tesla's Model S and Cadillac's new CTS, make that grade. For Tesla -- a start-up company using a new technology -- that's obviously a spectacular achievement. Tesla CEO Elon Musk and his team have executed at a level few thought possible for a start-up.
But think about the mess that General Motors was in just a few short years ago. That GM would emerge from the wreckage of a bankruptcy, and a humiliating government bailout, with a car that beats BMW at its own game might have been even harder to believe back in 2009.
Both of these are big achievements. And with GM's Akerson saying that Cadillac is planning to go "head-to-head" with Tesla with an electric car of its own, the battle is far from over. Stay tuned.
Fool contributor John Rosevear owns shares of General Motors. You can connect with him on Twitter at @jrosevear. The Motley Fool recommends BMW, General Motors, and Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.