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Why Is GM's Electric Cadillac So Expensive?

The 2015 Cadillac ELR, a luxurious plug-in hybrid based on the Chevy Volt's underpinnings, is set to arrive at U.S. dealers early next year. Photo credit: General Motors Co.

General Motors  (NYSE: GM  ) plans to launch the 2015 Cadillac ELR coupe early next year at a price of almost $76,000. For that price you'd expect the ELR to be a luxurious sports car, but it's not: It's actually a plug-in hybrid, one that GM is already positioning as a rival to Tesla Motors'  (NASDAQ: TSLA  ) electric Model S sedan.

That's an ambitious price and an ambitious target. But there's an interesting twist: The new Cadillac shares its drivetrain with GM's Chevy Volt, a car that can be had for less than half of the ELR's starting price.

What is GM thinking here? In this video, Motley Fool contributor John Rosevear -- who recently had a close look at a pre-production ELR -- shares his impressions of the new Cadillac, and offers some thoughts on what GM's real strategy with the ELR might be.

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Comments from our Foolish Readers

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  • Report this Comment On October 22, 2013, at 6:12 PM, speculawyer wrote:

    Because GM is making a bad decision. They want to get big profits off the ELR but this is going to back-fire by severely reducing sales.

  • Report this Comment On October 22, 2013, at 6:22 PM, fpl1954 wrote:

    I suspect GM can't keep up with demand and will use this high entry price to accomplish two things.

    1. Reduce demand to more closely match supply, avoiding a huge number of disappointed buyers.

    2. Use the snob appeal of high price to make sure only people who REALLY want the car buy it.

    GM isn't stupid.

  • Report this Comment On October 22, 2013, at 7:23 PM, japfleid14850 wrote:

    Here is the real answer:

    It cost GM about $45,000 to make a Chevy (excluding R&D cost), so if they sell for $70,000 or less, they will lose money, that is why!

    Now you understand why they can't reveal the cost, because it will bring an avalanche of bad PR, 100,000 worse than the bad publicity of $76,000 for ELR. They are poorly managed company, but have some intelligence, which is why they announce it on Friday and never talked about it again!

  • Report this Comment On October 23, 2013, at 4:28 AM, dwduke wrote:

    Cool looking car. Working folk won't be buying one though.

  • Report this Comment On October 23, 2013, at 9:55 AM, AcuraT wrote:

    The Volt, with tax breaks, is just under $30,000. This Cadillac is $76,000. GM can reach out to individual customers - but until they offer a car like Tesla with extended battery range, they are going to have a very hard time selling any of these. John Rosevear, give him credit, takes some guesses at what they are trying.... but I think in the end the expectation is that GM will sell very few of these. The Volt on the other hand, I am seeing more of those in CT which is surprising considering the cold weather and snow saps the range of the battery. However, my neighbors who own the Volt love it (none plan to buy the Cadillac...)

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