GM Doubles Down on Volt Failure; Sells Only 58 Electric Cadillac ELRs

NLPC ^ | March 10, 2014 | Mark Modica
General Motors continues to double down on plug-in electric vehicles, now offering the Cadillac ELR, which is a gussied up version of the Chevy Volt at twice the price. The latest Cadillac ELR ad has stirred up a lot of debate regarding its pro-American capitalism message as General Motors spent roughly $100,000 for each of the commercials that it ran during the Sochi Olympics. Although the commercial garnered much attention, the heavy ad spending resulted in just 58 of the tax-subsidized (each affluent buyer gets a $7,500 federal tax credit) Cadillac ELRs being sold in February, three months into the car's launch. The debate about the ELR ad seems to be omitting the most obvious question which is, why is GM wasting shareholder's money advertising a car that has no chance of having widespread market appeal? I'm sure GM apologists will have some explanation for the wasted marketing dollars that resulted in embarrassingly low sales. The same old sources that hyped the failed Chevy Volt (sales down over 25% in February to only 1,210 sold) can be seen speculating about the Cadillac version of the Volt competing with Tesla. The same deceptive excuses for the low initial sales figures for the Volt will likely be used for the Cadillac ELR. "Supply can't keep up with demand." "It is too early in the launch." Maybe we'll even hear of a right-wing conspiracy to hurt sales, like we did with the Volt. There is also the philosophy that the Cadillac ELR will excite people so much that they will rush to showrooms in droves only to be sold a different Cadillac model. Sorry, but that doesn't seem to be working either. Cadillac overall sales were down 3% in February, more than the total drop of 1% for GM. It is hard for GM to justify spending so much money advertising a vehicle that sells in such limited numbers but, like our government, GM has been supplied with an abundance of taxpayer money to do with as they please. It appears that GM's Washington masters who supplied the money want the company to continue the money-losing quest to force "green" vehicles on the public. The problem is that consumers do not want the cars. The politically-inspired management at GM just doesn't seem to get the basic premise that building better cars at the best value will lead to more sales. Spending millions of dollars on ads in an attempt to fool consumers won't work. Consider that you do not see Tesla spending heavily on TV ads, but the car sells on its own merits (along with lots of tax subsidies). Unfortunately GM vehicles, particularly the Cadillac ELR and Chevy Volt, do not have enough merits to negate the need for heavy ad spending which still can not persuade consumers to purchase the cars. It was obvious to many of us that a Cadillac version of the Chevy Volt, at twice the price, was not going to be a roaring success and really give Tesla a run for the money . I do not know why any auto industry pundit would say differently unless GM's ad spending is buying the favorable coverage. The attempt to put very costly lipstick on the Cadillac ELR pig will not convince motorists to buy the vehicles, nor will thousands of dollars in subsidies. The only thing that GM is doing by spending millions of marketing dollars in an attempt to deceive the public into believing that the Cadillac ELR is a viable competitor to Tesla is to further lower management's credibility. Mark Modica is an NLPC Associate Fellow.