What's going on?
Ferrari announced on Thursday that it’s investing billions into developing a slate of EVs.
What does this mean?
Ferrari has been working tirelessly for years to engineer its gas-fueled supercars into the perfect combination of deft handling and raw power. But EVs have been a distraction lately, sauntering into the garage and elbowing the jukebox like they’re the Fonz or something. That’s since forced the company to release a few hybrid models, which now make up 20% of its sales.
But even Ferrari has had to admit that it needs to move faster. So it’s now hoping to launch its first fully electric car in 2025, as well as make 40% of all sales fully electric within the following five years. And it’s just laid out a plan to do just that: the company is turning its flagship Italian factory into a hub for battery-powered cars, as part of a $4.6 billion investment that aims to make 60% of its models electric or hybrid by 2026.
Why should I care?
For markets: Ferrari lays it on thick.
Ferrari’s shares have underperformed most of its EV-ready rivals lately, so Thursday’s announcement will have come as a relief to investors. And that’s before the company got to the non-EV-based good news: Ferrari said it was expecting its profit to climb by as much as 80% this year compared to last, it promised to boost shareholder dividends, and it said that it intends to buy back over $2 billion worth of its own shares by 2026.
Zooming out: Your Fiat will have to wait.
Thing is, Ferrari is actually better-placed than most to thrive in this environment. Its customers, after all, aren’t the sorts of people wringing their hands over inflation, given that they’re, well… rich. But most of us aren’t, which might be why data out on Thursday showed that European car sales fell 13% in May from the same time in 2021 – the 11th drop in a row.