Why Ferrari shares tanked 6% after Luce EV reveal
What's the story
Ferrari's shares took a major hit on Tuesday, falling by over 6% after the company unveiled its first-ever fully electric vehicle (EV), the Luce. The Maranello-based sports car manufacturer introduced the highly anticipated model at an event in Rome. The name "Luce," which means "light," was chosen to represent clarity and direction, according to Ferrari.
New beginnings
'New chapter' in Ferrari's history
The launch of the Luce model marks a significant departure from traditional Ferrari designs. This comes as other luxury carmakers like Porsche and Lamborghini have scaled back their EV plans due to low demand. Ferrari CEO Benedetto Vigna called the day of Luce's launch "a very, very important day," adding it symbolizes "a new chapter" in the company's history.
Market response
Shares down nearly 27% over last year
Ferrari's shares were down 6.3% on Tuesday morning, paring some of its earlier losses. The Milan-listed stock is down nearly 27% over the last 12 months. Analysts have attributed this reaction to a mix of "design hate" and the classic market adage "travel and arrive." Michael Field, chief equity strategist at Morningstar, told CNBC that many fans are disappointed with Ferrari's embrace of EVs as they think it dilutes the supercar brand known for classic design and raw combustion-engine power.
Brand impact
Concerns over profitability and brand equity
Field also raised concerns over the high research and development costs associated with EV models, which could put pressure on the brand to recoup these costs. Anthony Dick, an auto analyst at Oddo BHF, said this is "by far the sharpest reaction we've seen for a car design — the market has spoken." He further warned that if Luce doesn't sell well, it could hurt Ferrari's profitability and brand equity.
Vehicle specifications
Luce comes with €550,000 price tag
The Luce is Ferrari's first five-seater car and can accelerate from 0 to 100km/h in about 2.5 seconds, with a top speed of some 310km/h. It comes with a price tag of around €550,000 (roughly $640,000) and deliveries are expected to start from the fourth quarter of this year. Despite the market reaction, Vigna assured that the Luce model would give Ferrari drivers "the same sensation" as any other typical model.