Policy: Environment & Energy

Despite dismal Volt sales, GM doubles down with expensive, less comparable Cadillac version

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Beltway Confidential,Ashe Schow,Energy and Environment

Doubling down on the poor sales record of the Chevy Volt, General Motors has decided to offer a limited-edition Cadillac version for the 1 percent — a move that already has industry experts rolling their eyes.

“There's no softening the blow with this one -- this is the limited edition 2014 Cadillac ELR Saks Fifth Avenue Edition, and it costs $89,500, including $995 for destination,” said Steven Ewing, an industry expert who writes for AOL-owned Autoblog. “The special model, limited to just 100 units, is part of a holiday season collaboration between Cadillac and luxury retailer Saks Fifth Avenue.”

The Cadillac plug-in hybrid comes with an exclusive white diamond exterior paint color and a choice of a jet black or light cashmere interior. The vehicle price includes a 240-volt charging station that will be professionally installed.

Sounds pretty luxurious, right?

Luxury aside, 86 percent of Autoblog readers said that the price tag was too expensive.

Despite GM highlighting that, after incentives, one could purchase an ELR for as low as $68,495, the chief competition — the Tesla Model S — starts at $63,570 after the $7,500 federal tax credit.

Think about that for a minute: Even expensive luxury vehicles receive the federal subsidy of $7,500, meaning taxpayers are subsidizing the 1 percent. The federal government is actually handing out subsidies to people who can afford a $70,000 car.

That tax credit doesn’t provide incentives for people who can already afford the car, said Edward Niedermeyer, a freelance consultant and former editor of popular auto blog The Truth About Cars.

“Giving credits for luxury vehicles, whether Tesla or Cadillac or the late Fisker, doesn't do anything to create a market for the vehicles,” Niedermeyer said. “It simply rewards early adopters, all of whom are wealthy enough to not need government help and almost all of whom would have bought the vehicle anyway.”

Niedermeyer also said that the tax credits insulate automakers from market pressures, which leads to less competition.

One reason for the unpopular rollout may have been the public’s ownership of GM, according to Niedermeyer.

“I think GM was afraid of the ‘optics’ of announcing an expensive Cadillac version of the Volt during bankruptcy, so it put out the Chevrolet Volt first,” Niedermeyer said. “That went against basic auto industry strategy, which puts expensive new technology in high-end models and then trickles them down to the mass market, and they're paying the price for it.”

The ELR's electric motor produces 154 horsepower and 295 lb-ft of torque, just a bit more than the Volt. Compare that to the Tesla, which gets double the horsepower and is purely electric. The ELR also only gets its peak power by using gasoline.

Where the ELR beats Tesla is in total range, but that’s only due to the ELR being able to travel more than 300 miles once the engine switches to gasoline power. But the ELR can only travel about 35 miles on electricity, and the Tesla can travel at least 208 miles on a single charge.

GM is now on defense after being criticized by auto analysts and the press about the exorbitant price of the ELR.

“General Motors dismisses recent criticism over packaging the Chevrolet Volt propulsion system into the Cadillac ELR and charging a $40,000 premium for the electrified luxury coupe, calling the pricing competitive with cars consumers would cross-shop,” said James Amend, associate editor for WardsAuto, an industry news site.

If the Volt is any indication, the Cadillac version may not sell well, although the limited edition only needs 100 buyers.

Volt sales continue to struggle to live up to expectations despite GM’s ad campaigns and the fact that Volt owners want everyone to know they really, really love their cars.

To be fair, the Volt outsold the Prius plug-in during the month of November (although the Prius beat the Volt in October), so plug-ins generally are not surging in the market, mainly due to an elevated price.

Nearly three-quarters of Americans want their next car to cost less than $25,000, according to a survey conducted by Navigant Research, which is problematic for plug-in vehicles.

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