MALIBU, CA – 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.

Insiders also say the automaker takes no satisfaction in the formal investigation the U.S. National Highway Traffic Safety Admin. launched this week to determine if a safety defect exists in certain Tesla Model S electric vehicles.

GM sources tell WardsAuto the Tesla investigation potentially affects consumer perception of EVs, a segment of the industry it “would like to see succeed.”

NHTSA last week began an investigation into the $74,000 Tesla sports sedan, “prompted by recent incidents in Washington state and Tennessee that resulted in battery fires due to undercarriage strikes with roadway debris.” In both incidents, as well as a third reported in Mexico, the vehicle caught fire. There were no injuries.

GM took heat in 2011 after a crash test of a propulsion system from a Chevy Volt extended-range EV caused its lithium-ion battery pack to catch fire. NHTSA opened a formal investigation into the Volt and later determined it posed no safety risk.

GM beefed up protection around the battery and Volt owners rallied behind the car, but government scrutiny continued with a Congressional hearing.

GM Chairman and CEO Dan Akerson testified to its safety and complained the car was being treated unfairly. Volt sales sunk for a short period.

“Although we loaded the Volt with state-of-the-art features, we did not engineer the Volt to be a political punching bag,” Akerson told Congress. “But that is what it has become.”

Tesla now appears in the same boat. Share of its high-riding stock fell 9% after NHTSA announced its inquiry, continuing a slide that began when news of the first Model S fire emerged in October. The Palo Alto, CA-based automaker says it plans to adjust the ride height of the Model S in response.

Model S demand has been gaining steam this year as the automaker has begun filling orders at a more brisk pace. According to WardsAuto estimates, sales of the Model S reached 16,391 units through October, putting it on pace to deliver more than 19,500 this year.

GM thinks it could get a piece of that action with the ELR, which at $76,000 goes head-to-head with the Model S. GM has put no sales targets on the ELR, saying it expects, and wants, the car to be an exclusive offering. It has no cap on the product cycle, expecting production to last a number of years.

The automaker turned heads last month when it announced ELR pricing, drawing criticism from some circles because the car uses the much less expensive Volt’s propulsion system. Others were unsure the comeback of the Cadillac brand has reached a point where it could exercise such pricing power.

“We think it is competitive with the vehicles in its class,” says Darin Geese, marketing product manager-Cadillac ELR/Chevrolet Volt at GM.

GM thinks consumers will cross-shop the ELR with the $88,000 BMW 6-Series Grand Coupe. Buyers also may eye the more modest BMW 4-Series, which starts at $48,000 but like many luxury-car prices can rise quickly with option packages added.

“Just start checking the boxes,” Geese offers.

Chris Thomason, chief engineer-ELR at GM, understands the pricing skepticism because the propulsion system debuted at a volume brand instead of trickling down from a luxury nameplate as is traditional with new technology. But, he adds, GM initially wanted to make the technology within reach of as many people as possible. It ended up becoming the most-decorated propulsion system in industry history.

“You would be crazy, as a manufacturer, if you didn’t use it in other applications,” Thomason tells WardsAuto during a media drive of the ELR here.

The ELR, arriving at Cadillac dealers next year, also adds a slew of mechanical and material upgrades to its execution.

For example, the suspension receives continuous damping control and GM’s HiPer Strut technology, which combine to make the ELR handle like a luxury sports car.

The ultra-light, cast-aluminum 20-in. wheels and Bridgestone tires were specifically developed for the ELR to offer performance but retain an MPG-saving, low-rolling resistance construction. The special wheels add about 20 lbs. (9.1 kg) apiece to the ELR’s curb weight, compared with the 17-in. variety found on the Volt.

Thomason says GM sacrificed such a precious weight gain because “we had to do that to recreate the Converj show car.”

Inside, the ELR receives luxury appointments such as 20-way power front seats, premium leather seating surfaces and authentic wood, suede and carbon-fiber trim pieces. The piping on the seats is leather, too, while every piece of suede also is authentic. GM could have finished rarely seen parts of the headliner in less-expensive Alcantara.

“We could have used vinyl on the piping and no one would know the difference, but it would not have been a Cadillac by today’s standards,” Thomason says. “Same for the suede.”

GM also tweaks the propulsion system’s software for greater performance over its Volt cousin, altering the throttle mapping and tightening up the steering response. The ELR uses more of the propulsion system’s 16.5-kWh Li-ion battery, too, but retains an all-electric range of 37 miles (60 km) and 345 miles (555 km) overall with its 1.4L 4-cyl. engine/generator.

jamend@wardsauto.com