Ferrari bodies move in a file on robotic vehicles through a gleaming new factory in northern Italy, where in each workshop engineers in bright red uniforms are fitting parts like engine blocks, dashboards and steering wheels, transforming the bodies into hybrids that will go all-electric next.
Ferrari's €200 million “eBuilding,” which opened last month and is nearly twice the size of Rome's Coliseum, is intended to lead the 77-year-old sports car maker known for the roar of its gasoline engines into the electrified age.
But the effort comes at a precarious time for the auto industry, as the transition to electric vehicles that was expected to quickly usher in an era of greener transportation is being weighed down by high investment costs and slowing global demand.
Other luxury car makers are also struggling to go electric. Mercedes-Benz and Lamborghini have scaled back their ambitions. Tesla reported a drop in second-quarter sales on Tuesday, and Ford Motor said in April it would shift production to hybrids as EV losses pile up. An escalating trade war between China and the West also threatens to hurt growth.
Despite the challenges, Ferrari sees an opportunity to attract new consumers: wealthy environmentalists, in the auto industry's inevitable shift toward electric vehicles. The company plans to unveil its first all-electric car in the fourth quarter of next year. As part of the strategy, Ferrari has worked with LoveFrom, an agency founded by former Apple design chief Jony Ive and industrial designer Marc Newson, to refine the look of its cars.
There's a lot of mystery surrounding the as-yet-unnamed car, including its battery life and sound. The company hasn't revealed what it will look like, how many 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, potentially even surpassing Porsche's $286,000 Taycan Turbo GT.
Ferrari's move into electric cars is notable for other reasons, too: Regulators may be pushing electric vehicles, but skepticism persists in the market. Winning over fans of the internal combustion engine won't be easy, even for Ferrari. And the industry is hungry for automakers. Any Automakers are trying to prove that electric cars can generate big profits.
“It will be interesting to see whether the Ferrari EV can maintain the kind of price premium that comes with a Ferrari,” said Martino De Ambrosio, an auto analyst at Milan investment bank Equita. “Buying a Ferrari is often seen as a kind of investment. Only in a few years will it be clear whether the investment in an electric Ferrari is sustainable.”
Ferrari Chief Executive Officer Benedetto Vigna is trying his best to keep market expectations up. In an interview at the new factory last month, he said the company will begin full-scale electric-vehicle production by early 2026. Electric and hybrid vehicles will make up 80% of the company's annual production by 2030, as the company aims to meet strict European Union emissions regulations.
Meanwhile, the e-Building will offer two models: the plug-in hybrid SF90 Stradale and the internal combustion engine Purosangue.
Ferrari doesn't need electric cars to boost profits. The company has been doing well under Mr. Vigna, a former executive at chipmaker STMicroelectronics who took the helm nearly three years ago. Its shares have been one of Europe's best-performing stocks this year, with a market capitalization of about $75 billion, more than Ford or General Motors. Profits have soared along with prices at Ferrari, which makes some of the world's most expensive cars. Some models have a three-year wait list.
Ferrari's years of success on the F1 track have also enabled it to develop a lucrative corporate sponsorship and merchandise business, transforming it into a luxury brand with a sporty vibe: its prancing horse logo can be seen on high-end apparel, such as a €790 cashmere sweater.
Vina sees electric vehicles as part of the company's growth strategy despite the industry slowdown. “There are some potential customers who would never have become part of their family if it weren't for an electric vehicle, and they are definitely in my mind,” he said.
But the challenges are legion: Enthusiasts gathered outside the factory gates last month wondering whether the car would look, handle and sound like a classic Ferrari Growler, or whether it would sound more subdued like most electric cars.
“When you think of Ferrari, you think of that engine feel and that roar,” De Ambroggio said. “I don't know how Ferrari solves this.”
Vigna gets that question a lot, especially from longtime customers and fellers.. They appear to be emulating late founder Enzo Ferrari, who once explained in the simplest terms how he built some of the fastest cars on the planet: “You build a motor and you put it on wheels.”
Vigna's EV pitch has a different ring to it: “Electric engines are not quiet,” he says. “There are ways to ensure that you get the same thrill from driving an electric Ferrari as you get from driving a hybrid or a thermally powered Ferrari.”
Battery life is another piece of the puzzle: Ferraris often command high prices on the second-hand market, so concerns about battery degradation and how it affects the car's long-term value may be felt even more acutely among Ferrari enthusiasts.
“The shift to EVs raises a lot of new questions in terms of how to maintain vehicles,” said Steven Reitman, an auto analyst at Bernstein.
South Korean battery maker SK On, a long-time Ferrari partner, will supply the EV battery components which Ferrari will assemble in its e-buildings, as well as manufacture the car's electric motor and axles.
Then there's the question of price: Last month, Reuters reported that the car would cost at least 500,000 euros ($540,000). Vina denied the speculation, saying it was too early to talk price.
Ferrari remains committed to its founder's philosophy of producing very expensive cars in limited quantities: it made fewer than 14,000 last year, and e-building is not expected to significantly increase production initially.
The limited number of Ferraris may explain why fans make the pilgrimage to Maranello to catch a glimpse of a Ferrari at either the Ferrari F1 test track or close to the red brick factory.
Recognizing the high demand, Vina has raised the base prices of most models by more than 25%.
“Ferrari has consistently sold less than market demand and has a multiyear order book,” said Reitman, the Bernstein analyst. With profit margins approaching 30%, Ferrari's business is similar to that of luxury brands such as Hermes and Rolex, analysts say.
Mr. Vina is already thinking about how to market the new electric vehicle, and his target customers probably won't buy it for purely practical or planet-saving reasons, he said, adding that “the emotional part of the brain drives purchases.”
