The legendary sports car manufacturer from Maranello also has to and wants to switch to electric drives. It loses its traditional “heart”, the powerful engines. That arouses fears in the Ferrari parent countries.
A technician works on an engine May 8, 2013 in Maranello.
In Maranello, the car world is (still) in order. On the occasion of the company’s 75th birthday, many of the loyal customers came to the 17,000-inhabitant city near Modena. Now they roll through the factory premises in a small convoy and let the engines roar. Car enthusiasts are still welcome in the Motor Valley around Bologna and Modena, where Ducati, the exclusive supplier Pagani, Maserati and the Audi subsidiary Lamborghini are also based. There are no environmental activists blocking roads and paralyzing traffic with other actions.
60 vehicles per day
Ferrari has been producing its sports cars here – and only here – since 1947. While the cars roar loudly outside, the noise level in the huge factory halls, which are bright and full of plants, must not exceed 73 decibels. The engines are the pride of the 4,600 employees, the company and the region. In the “Area Tecnologia Montaggio Motori”, where the engines are assembled, a sign reads: “We have been building the heart of every Ferrari for more than 70 years.” Around 60 vehicles roll off the assembly line every day. You are in demand like never before. Most buyers have more than one Ferrari in their garage – and with prices starting at 200,000 euros.
The car expert Giuseppe Berta says: “This is one of the best-known brands in the world. The quality is very high, the margins are huge, and it’s more important to have high margins than high sales.” A few years ago, Ferdinand Dudenhöffer, director of the private-sector CAR Center Automotive Research in Duisburg, calculated an operating profit of 69,000 euros per vehicle sold. In the meantime it will be much more.
And at this week’s Capital Markets Day, the new CEO Benedetto Vigna announced even more ambitious goals: sales are to increase by 9 percent per year, operating profit (EBIT) and dividends are to be doubled to 2 billion euros each by 2026. And Ferrari is sold out well into next year.
success in the stock market
Economically, things are still going well. With only 11,000 cars sold, the company is worth more than 32 billion euros on the stock exchange. At the end of November 2021 it was even around 45 billion euros. However, there are also many worries in Maranello. In Formula 1 things are going better this year after several catastrophic years, but vehicles keep failing in the race.
But the deep upheaval in the industry weighs much more heavily. From 2035, cars with internal combustion engines will no longer be allowed to be sold in the EU. Small suppliers like Ferrari are allowed to sell them for another year, but that is not decisive. The service life of the powerful engines, the “heart” of the Ferrari, is therefore limited. Without a heart you die. As if in defiance, the SUV Purosangue will be presented in September – exclusively with a V12 engine.
CEO Benedetto Vigna has now also announced that he will increase the share of fully electric cars to 40 percent by 2030 and that of hybrids to 40 percent. Ferrari has had hybrid models on offer since 2013, which contribute around 20 percent to sales. However, the first full electrician will not come until 2025.
Where Porsche has an advantage
Porsche has had a fully electric Taycan since 2019. Every fourth Porsche sold is electrified. Vigna is still confident. Together with partners, he does not say with which ones, he wants to set up his own battery production in order to ensure Ferrari’s exclusivity in this sector as well. The man, a specialist in the electronics industry with more than 200 patents, was a top manager at chip manufacturer ST Microelectronics for many years. He refers to the high electronics know-how thanks to the Formula 1 commitment and has brought many IT and sensor specialists to Ferrari. “It’s not important to us to be the first, but to come up with a unique technology,” says Maranello somewhat defiantly.
Many experts are skeptical that this will succeed. Because Italy’s auto industry has generally overslept the change. The industry association Anfia fears the loss of up to 70,000 jobs. And the Motor Valley will lose its importance as a producer of high-performance drives. Maserati, Fiat, Alfa Romeo and Ferrari have not invested enough in alternative drives for years. The first three companies are now part of the French-dominated Stellantis group.
Outsourcing financially lucrative
Ferrari, spun off from Fiat-Chrysler in 2015 and listed separately on the stock exchange, has since increased the assets of major shareholder Exor, even if the price has undergone a significant downward correction since the end of 2021. There were also generous dividends. Ferrari is valued more like a luxury goods group than a car company and relies on exclusivity. “We’d rather build one less car than the market demands,” says Vigna. The fact that there are long waiting lists is viewed positively in Maranello.
Critics say Ferrari should have invested more in alternative drives. The company has long since lost its innovative strength. Many new models in recent years have only been facelifts or niche models. Electrification is only just getting started. Too late?
Only with regard to the IPO is the Ferrari spin-off a model for Volkswagen, which wants to list its subsidiary Porsche separately. When it comes to electrification, on the other hand, Porsche is much more advanced than the Italians, thanks to its financially strong parent company. Ferrari as a small company needs partnerships.
Nevertheless, Vigna is optimistic that the gigantic challenge will succeed and that the Ferrarista will also appreciate the electric drives, the main components of which come from China. The sound, the performance and the driving experience were right. Ferrari guarantee it. But, is this really the truth? What differentiates a Ferrari from other vehicles when the car becomes an electrically powered computer on wheels? Vigna cannot give this answer either.