How Ferrari Is Future-Proofing Its Business As Supercar Battle Looms

Luxury sports-car maker Ferrari (RACE) is “future-proofing” its earnings potential with a new factory for its first all-electric vehicle, one analyst said. Both Ferrari and Tesla (TSLA) are angling to bring electric supercars to the market next year. Ferrari stock rose nearer a buy point on Tuesday. Tesla stock extended its rally above a key level.

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Ferrari Vs. Tesla Supercars

Last Friday, Ferrari inaugurated the “e-building,” a factory to build its first pure electric vehicle, in its home base of Maranello in Italy. The first Ferrari electric supercar reportedly will come with an eye-watering 500,000-euro ($535,350) price tag when it debuts late next year. That would be far steeper than the next-generation Tesla Roadster, which is also supposed to be coming in 2025, priced between $200,000-$250,000. But the new Roadster has seen several delays since its return was first announced in 2017.

Also in 2025, Lewis Hamilton is set to join Ferrari. The seven-time Formula One champion is moving away from Mercedes, a brand he has been tied with since the age of 13.

RBC Capital Markets analyst Tom Narayan attended the new factory’s unveiling last Friday. He came away with the impression that “Ferrari’s new e-building is designed to future-proof the company” for the next 20 to 30 years.

“Importantly, management seems genuinely excited about its upcoming battery electric vehicle,” he wrote in a note to clients on Monday.

New Factory To Make EVs, Fuel Ferrari Earnings

According to Ferrari, the e-building will produce combustion engine cars and hybrid vehicles, as well as the forthcoming new electric vehicles. It will make EV components, such as battery packs, e-motors and e-axles, as well.

Eventually, Narayan expects the new factory to help increase Ferrari’s production capacity. More immediately, he sees it giving Ferrari the flexibility to reallocate capital across various powertrains in line with market demand. He said it will also fuel profitable services for adding personal touches to cars, which can carry a 19% premium to Ferrari’s base pricing.

By 2030, Ferrari could produce 20,000 cars a year, with EVs making up 40% of the product mix, Narayan said. The higher deliveries could help the company double revenues to 10.3 billion euros by 2030, with earnings, before interest and taxes, growing 15% annually over this period, the analyst added.

For context, Ferrari delivered 13,663 cars in 2023 and generated 5.97 billion euros in revenue, an increase of 17%. Those results got a lift from hot-selling hybrids as well as the fast-selling Purosangue SUV. The latter, Ferrari’s first four-seater, four-door vehicle, went on sale last year.

Like other legacy automakers, Ferrari is contending with a costly shift toward electric vehicles, while EV demand cools. But it may have an edge vs. others given its customer base of luxury car buyers. “Switching to EVs likely will not be margin dilutive and higher cost e-drives will simply be passed on to the consumer,” Narayan said.

Ferrari targets the market for performance cars powered by 500-hp engines and priced above 180,000 euros.

Ferrari Stock, Tesla, Supercar Stocks

Shares of Ferrari edged up 0.7% to 424.48 on the stock market today. Ferrari stock moved closer to a 442.80 buy point from a flat base, now trading within 4% of the entry, MarketSurge pattern recognition shows.

Investors could use the May 3 interim high of 434.10 or the June 12 high of 429.14 as early entries. The flat base shows healthy signs. It’s a shallow consolidation, marked by tight weekly closes, a sign that investors are holding steady. Ferrari stock also regained the 50-day/10-week moving average in light trade.

Tesla stock popped 2.4% on Monday, rising further above the 50-day average, which remains below the 200-day line.

Ferrari spun off from Fiat Chrysler parent Stellantis (STLA) in January 2016. Germany’s Volkswagen (VWAGY) spun off Porsche in a 2022 IPO. Among other supercar stocks, Britain’s Aston Martin made its public debut in 2018.

In the U.S. market, Mercedes-Benz (MBGAF), Porsche (POAHY) and Aston Martin (AMGDF) all trade over the counter.

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