You're probably right about the "subsidized" part of the dropping the Volt equation. But I get the feeling that GM is more interested in talking about electric cars than in selling them. You almost never see advertising, which tells you how serious they are about them.
I certainly agree with you that the Prius (or the like) makes more sense for long trips. But the vast majority of trips are short commuting trips: my Volt does about one and a half 34-mile round trips to work for me on 100% electric. So the gas engine doesn't get used for several weeks at a time, but we have still used it to drive from Maryland to Colorado, just like a normal car. It seems to me that there's a niche for that sort of thing! I don't think the majority of people are willing to have their one-and-only car be one that requires 30 or 45 minute stops every 250-300 miles to recharge. Pure battery vehicles don't yet make sense for long distance transport, whether by car, boat, or (god forbid) plane. But most travel isn't long distance.