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Ferrari Ventures Into Electric Era Amid Industry Challenges

by Lily Chang
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In a new factory in northern Italy, Ferrari chassis slide onto robot trucks as engineers in cherry-red uniforms add components like the engine block, dashboard, and steering wheel, turning these bodies into hybrids. Soon: fully electric.

There’s a lot at stake in Ferrari’s €200 million “e-building,” which opened last month. Almost twice the size of Rome’s Colosseum, the factory aims to propel the 77-year-old sports car maker, famous for the roar of its combustion engines, into the age of electrification.

However, this effort comes at a delicate time for the auto industry. The transition to electric vehicles, which should have quickly ushered in an era of climate-friendly transportation, has been slowed by costly investments and slowing global demand.

Other luxury carmakers have struggled with electrification. Mercedes-Benz and Lamborghini have scaled back their ambitions. Tesla reported a second-quarter sales decline, and Ford Motor announced in April it would shift production to more hybrids because of accumulated losses in electric vehicles. And a growing trade war between China and the West threatens to stifle growth.

Despite the challenges, Ferrari sees an opportunity in the industry’s inevitable march toward electrification to appeal to a new consumer: the wealthy environmentalist. It plans to unveil its first all-electric model in the fourth quarter of next year. As part of its strategy, the automaker has enlisted LoveFrom, the agency founded by former Apple design chief Jony Ive and industrial designer Marc Newson, to refine the car’s look.

There’s a lot of mystery surrounding the as-yet-unnamed car, including its range and sound. The company hasn’t revealed what it will look like, how much it will cost, or how much it will cost. But it could be one of the most expensive electric vehicles on the market, surpassing Porsche’s $286,000 Taycan Turbo GT, according to analysts.

Ferrari’s foray into electric will be noteworthy for other reasons. Although regulators may push for electric vehicles, market skepticism persists. Winning over combustion engine enthusiasts will not be easy, even for Ferrari. And the industry desperately needs some automaker to prove that electric vehicles can generate significant profits.

“It’s worth seeing if an electric Ferrari can maintain the kind of premium you’d associate with a Ferrari,” said Martino de Ambroggi, an auto analyst at Equita, an investment bank in Milan. “Often, buying a Ferrari is also seen as a kind of investment. Only after a few years will we see if that investment in an electric Ferrari holds up.”

Ferrari CEO Benedetto Vigna is doing everything he can to keep the market on edge. In an interview last month at the new plant, he said the company would begin mass production of electric vehicles in early 2026. By 2030, electric and hybrid cars will account for up to 80 percent of Ferrari’s annual production as the company seeks to meet stringent European Union emissions mandates.

In the meantime, the electric building will launch two models: the SF90 Stradale, a plug-in hybrid, and the Purosangue with a combustion engine.

Ferrari doesn’t need an electric vehicle to boost its profits. Under Vigna, a former executive at chipmaker STMicroelectronics who took over nearly three years ago, the company has thrived. The stock is one of Europe’s top performers this year, giving it a market valuation of about $75 billion, more than Ford or General Motors. Profits are rising along with prices at Ferrari, which makes some of the most expensive cars on the planet. There’s a three-year waiting list for some models.

Ferrari’s success on the Formula 1 track over the years has also led to a lucrative business in corporate sponsorships and merchandising that has transformed it into a luxury brand with a sporty edge. Ferrari’s prancing horse logo can be found on high-end clothing such as a 790 euro cashmere sweater.

Vigna sees the electric vehicle as part of the company’s growth strategy despite the industry slowdown. “There are some potential customers, I see them, that will never become part of the family if there’s not an electric car,” he said.

But challenges still lie ahead. Enthusiasts gathered outside the factory gates last month wondered: Will it look, handle and sound like a classic Ferrari roar, or will it have the thin wail of most electric vehicles?

“When you think of a Ferrari, you still have that feeling of the engine, and you also think of the sound,” de Ambroggi said. “I don’t know how Ferrari is going to solve that problem.”

Vigna gets this question a lot, especially from longtime customers, or Ferraristi. They seem to draw inspiration from the late founder, Enzo Ferrari, who once explained in simple terms how he built some of the fastest cars on the planet: “I build engines and attach wheels to them.”

Vigna’s argument about electric vehicles sounds different. “The electric motor will not be silent,” he said. “There are ways to ensure that the thrill you get from driving an electric Ferrari is the same as when you drive a hybrid or combustion Ferrari.”

Battery life is another piece of the puzzle. Since Ferraris often sell for a premium on the secondary market, concerns about battery degradation and its impact on the car’s long-term value may be more acute for Ferraristi.

“The shift to electric vehicles raises a lot of new questions about vehicle maintenance,” said Stephen Reitman, automotive analyst at Bernstein.

SK On, a South Korean battery manufacturer and long-time partner of Ferrari, will supply the components for the electric vehicle batteries, which Ferrari will assemble in the building dedicated to electric components, where the car’s electric motors and axles will also be made.

And then there’s the question of price. Last month, Reuters reported that the car would cost at least 500,000 euros ($540,000). Vigna dismissed the speculation, saying it was too early to talk about pricing.

Ferrari still adheres to its founder’s principle of producing a limited number of extremely expensive cars. Ferrari produced less than 14,000 of them last year; even with the electric building, production is not expected to increase much at first.

The limited number of units may explain why enthusiasts make the pilgrimage to Maranello, hoping to glimpse a Ferrari, either on the company’s Formula 1 test track or near its red-brick factory.

Recognizing the high demand, Vigna has increased the base price of most models by more than 25%.

“Ferrari consistently sells less than the market demands, leading to a multi-year backlog of orders,” said Reitman, the Bernstein analyst. With a profit margin of nearly 30 percent, Ferrari’s business more closely resembles that of a luxury brand like Hermes or Rolex, analysts say.

Vigna is already thinking about how to market the new electric car. The target customer probably won’t buy the car for purely practical reasons or even to save the planet, he said, adding, “The emotional part of the brain is driving the purchase.”

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