So you seem to have a pretty good understanding of the why, but there may be something missing here.
Your modified LTV (as others have rightfully spelled out, LTV=Loan-to-value) has to make sense to the bank. It includes everything that you're including in this loan, which according to your first post, sounds like everything: taxes, fees, GAP insurance, etc. Now, an auto loan is a secured loan- the vehicle being purchased is the collateral against the loan.
The vehicle being purchased has an ACV, or an Actual Cash Value. The ACV is simply that- the actual value of the car according to independent sources, or in other words, someone other than the dealer or the buyer. This ACV is considered in the writing of the loan, because that is the collateral used to secure the loan in its entirety.
Essentially, your credit union is doing a pretty simple equation: what is the total value of the loan being requested and dividing that by the ACV of the car. So in your case, it would be the final sales price of the car, plus tax, fees, and GAP insurance (at a minimum). Using what minimal tools I have at my disposal, and with limited information about your car (basically only year, mileage, and your location), your car is roughly worth $12,500 private party sale according to KBB. Your credit union will have their own source for ACV, supplying a much more accurate number than mine. If your total loan amount goes too far beyond that number, in this instance we'll use the $12,500 amount, the loan is now too risky for the credit union to sign into contract. They may be willing to accept greater risk in exchange for a higher interest rate, but if the purchaser's income or credit score won't support this, then there's nothing to incentive the credit union for taking the extra risk.
There are a couple of ways to fix the problem, but they all deal with the same side of the equation- the total loan amount side. You can supply a down payment, which obviously brings down the amount being borrowed. You can exclude things such as GAP insurance (which if I'm not putting money down, I wouldn't recommend) or sales tax from the loan. This would require you to pay cash for them, however. Or you can negotiate down the price of the car with your dealer. Without fixing the total loan amount side of the equation, there's little chance your credit union is going to change their mind. You could try a different lender, as each lender has their own risk tolerance, but that's about all the options you have.
Now, as for potentially switching gears and looking at a different, cheaper car. Maybe I misread, but it didn't sound like you were putting any money down. Moving to a cheaper car won't necessarily fix the problem since, as you can probably guess, a cheaper car is likely to have a lesser ACV. We're bringing down both sides of the equation, which doesn't really help balance it out. The only way the Fusion Energi makes sense is if it has an ACV similar to the Volt, but at a cheaper price. Maybe it's been sitting on the dealer's lot for a while, maybe it's a lesser trim, who knows. That's the only way it solves your problem, however.
My recommendation would be to return the car and work on saving some money. A down payment potentially cures a lot of ills when it comes to financing a car. I'm sure you don't need my financial advice, but in reality, financing an 8 year old car with little to no money down is not a great recipe for success. I've said my piece, however. I hope this works out for the best for you, whatever ends up happening.