As electric car revolution slows, Ferrari joins the fray

A row of Ferrari frames glides on robotic tractors through a gleaming new factory in northern Italy. At each station, engineers in cherry-red uniforms add a component—an engine block, a dashboard, a steering wheel—to transform the body into a hybrid car. Next comes a fully electric car.

Ferrari’s €200m “electric factory” opened last month and is nearly twice the size of Rome’s Colosseum, bringing a huge opportunity to the automaker, which is designed to bring the 77-year-old sports car maker, best known for its petrol-engined hum, into the electric age.

But the move comes at a tough time for the auto industry. The shift to electric vehicles, which was supposed to jumpstart an era of climate-friendly transportation, has been hampered by costly investments and slowing global demand.

Other luxury automakers have also struggled on the road to electrification. Mercedes Benz and Lamborghini Their ambitions have been lowered. Tesla The company reported a decline in second-quarter sales on Tuesday. Ford The company said in April it would shift production toward more hybrid vehicles as losses on electric vehicles mount.A growing trade war between China and the West also threatens to curb economic growth.

Despite the challenges, Ferrari sees an opportunity in the auto industry’s inevitable move toward electrification to attract a new consumer: wealthy environmentalists. It intends to launch its first all-electric model in the fourth quarter of next year. As part of its strategy, the automaker hired LoveFrom, an agency led by former Apple design chief Jony Ive and industrial designer Marc Newson — Complete the car’s exterior.

There are many mysteries surrounding the yet-to-be-named car, including its battery life and sound. The company has not revealed what it will look like, when it will be produced or how much it will cost. But analysts say it could be one of the most expensive electric cars on the market, more than $200,000. Porsche Taycan Turbo GT priced at $286,000.

Ferrari’s move into electric vehicles has other reasons to be interesting. Regulators may be pushing for electric cars, but skepticism remains in the market. Winning over fans of internal combustion engines won’t be easy — Even Ferrari. The automotive industry is in desperate need of a car manufacturer, any Automakers are trying to prove that electric vehicles can bring huge profits.

“It will be interesting to see if the Ferrari electric car can maintain the same price premium as Ferrari cars,” said Martino de Ambroggi, auto analyst at Milan-based investment bank Equita. “Usually, buying a Ferrari is also seen as an investment. Only in a few years will we see if the investment in an electric Ferrari is sustainable.”

Ferrari CEO Benedetto Vigna is doing his best to keep the market excited. In an interview at the new factory last month, he said the company will start full-scale production of electric vehicles in early 2026. By 2030, electric and hybrid vehicles will account for 80% of Ferrari’s annual production as it seeks to meet strict European Union emissions regulations.

At the same time, the electric car factory will launch two models: the plug-in hybrid SF90 Stradale and the internal combustion engine model Purosangue.

Ferrari doesn’t need electric cars to pad its profits. Under Vigner, a former executive at chipmaker STMicroelectronics who took over as CEO nearly three years ago, Ferrari has been on a roll. Its shares are among the best performers in Europe this year, with a market value of about $75 billion, larger than Ford or General Motors. Ferrari makes some of the most expensive cars in the world, and profits have soared along with prices. Three-year waiting list For some models.

Ferrari’s success over the years on the Formula One circuit has also led to a lucrative corporate sponsorship and merchandising business, making it a luxury brand with a sporty feel. Ferrari’s prancing horse logo can be found on high-end clothing, such as the 790 euro sterling silver lining. Cashmere sweater.

Despite the industry slowdown, Mr. Viniar still sees electric vehicles as part of his company’s growth strategy. “I remember clearly some potential customers who would never have had an electric car as part of their family without one,” he said.

But challenges loom. Enthusiasts who gathered outside the factory gates last month wanted to know: Will it look, handle and sound like a classic Ferrari growler? Or will it just have the low-pitched whine that most electric cars do?

“When you think of Ferrari, it still has that engine feel, you still think of the roar,” Mr. D’Ambrogi said. “I don’t know how Ferrari can solve this problem.”

Mr. Vigna often answers these questions, especially from long-time customers or Ferrari owners.. They seem to be emulating their late founder Enzo Ferrari, who once explained how he built the world’s fastest cars in the simplest of terms: “I make engines and put them on wheels.”

Mr. Vigna’s pitch for electric cars sounds a little different. “Electric engines are not going to be silent,” he said. “There are ways to make sure that the feeling when you drive an electric Ferrari is the same as the feeling when you drive a hybrid or a hot Ferrari.”

Battery life is another challenge. Ferrari owners may be more concerned about battery aging and its impact on the long-term value of their cars, as Ferraris typically fetch higher prices on the secondary market.

“The transition to electric vehicles creates a lot of new problems for them in terms of vehicle maintenance,” said Stephen Reitman, an auto analyst at Bernstein.

Ferrari’s long-term partner, South Korean battery maker SK On, will provide components for the electric car batteries, which Ferrari will assemble in the electronics building, where it will also produce the car’s electric motors and axles.

Then there is the question of price. Last month, Reuters Reported Mr. Vigna dismissed speculation that the car would cost at least 500,000 euros ($540,000), saying it was too early to talk about price.

Still following the principles of its founder, Ferrari produces extremely expensive cars in limited numbers. Ferrari made fewer than 14,000 last year; even with the introduction of electronics, production is not expected to increase much at first.

The limited numbers may explain why fans travel thousands of miles to Maranello in the hope of catching a glimpse of a Ferrari, whether on the company’s Formula 1 test track or near its red-brick factory.

Knowing demand would be high, Mr. Viniar raised base prices on most models by more than 25 percent.

Bernstein analyst Reitman said: “Ferrari’s sales have been lower than market demand, resulting in persistent order shortages for many years.” Analysts said Ferrari’s profit margin is close to 30%, and its business is more like luxury brands such as Hermes or Rolex.

Mr. Viniar is already thinking about how to market the new electric car. He said the target customer might not buy the car purely for practical or environmental reasons, adding: “The emotional part of the brain drives purchasing behavior.”