Cadillac exec admits that poor-selling ELR Coupe was overpriced

Article by Christian A., on May 18, 2015

Sales of Cadillac’s ELR Coupe, its first-ever electric vehicle, have been dismal. In the last 18 months, just 1,835 Cadillac ELR Coupes were sold in North America. TrueCar said that dealerships located in New York City have been selling the ELR for slightly lower than $50,000 – which means that 35% was cut from the sticker price.

“A great learning exercise” is how Cadillac marketing chief Uwe Ellinghaus describes the company’s experience with this car. To be fair, the ELR Coupe is only one of several electric cars that are being offered lower than their sticker prices. Presently, buyers have been flocking to larger, less frugal vehicles amid cheaper gas prices.

However, the discount on the ELR is particularly drastic. Cadillac is aware that the primary problem with the ELR is the fact that the green technology it uses, including the powertrain and the battery, is used in the Chevrolet Volt (which has a $35,170 sticker price). It’s difficult, if not impossible, to justify the price difference with only some luxurious cockpit leather, LED headlamps, and olive wood trim to make the ELR stand out.

What the automaker set out to do was raise the price because these lush features came as standard instead of options. Ellinghaus explained, "We overestimated that customers would realize our competitors were naked at that price." In addition, the ELR isn’t actually as green as the other electric vehicles.

Majority of hybrids burn gas to move the vehicle but the ELR uses a conventional engine mainly to recharge the batteries. This system, which features a 9.3 gallon gas tank, is referred to by GM as “electric drive.” The company claims that this car is capable of approximately 82 miles per gallon. However, a gallon actually allows a drive for as low as 33 miles on long trips where gas kicks in for battery recharging.

Cadillac has its reasons for pricing the ELR much higher. First, it wanted to split the buyers by how much they were willing to pay. For instance, if the price is too near the Volt, those buyers who are willing to pay six figures for an environmentally friendly vehicle would simply get the cheaper electric vehicle.

In a marketing’s point of view, costing the car at nearly $80,000 gives off the message that this car is truly a valuable Cadillac with its heated steering wheel, 10-speaker Bose stereo, and the prominent badge on its grill. Giving it this price places it in the same level as Tesla’s car.

Ellinghaus said that the company merely hoped to make a statement on how progressive the brand has become. Not many believed in the brand’s reasoning.

Many considered the ELR to be a ridiculously expensive Volt. Some viewed it as a nice Cadillac with a powertrain that’s not quite luxurious. TrueCar added up its parts and found out that it actually should cost over $26,000 lower than its sticker price.

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