Ferrari prepares the expansion of an Italian factory for electric vehicles

(Bloomberg) — Ferrari NV plans to significantly expand its factory in northern Italy as part of the electrification strategy it will unveil at a much-anticipated briefing next week, according to people familiar with the case.

The supercar maker has taken up space near its Maranello factory and has started to pave the way for a third production line which will be dedicated to making hybrid and electric vehicles, said the people, who asked not be identified because the information is private. The expansion will also likely include a new battery research and development center, they said.

Ferrari will spotlight the project during its capital markets day on June 16, when CEO Benedetto Vigna is expected to shed light on Ferrari’s EV strategy and present its business plan for the next four years. The former STMicroelectronics NV executive was brought in to accelerate the move away from the 12-cylinder engines and four-digit horsepower that the automaker is known for.

A Ferrari spokesman declined to comment. The manufacturer’s U.S. shares rose 1.3% at 1:15 p.m. Thursday in New York, reversing an earlier decline.

Ferrari cultivated one of the world’s most valuable brands long before it staged a successful IPO in 2015. While the company continues to post enviable profit margins, its shares have underperformed recently, in part due to concerns over its late start in the EV race. and how much will it cost to catch up. The stock has fallen 22% this year in Milan, behind Italy’s benchmark stock index and its European auto counterparts.

“The focus is on the company’s electrification strategy and how its technology can adapt to a changing world, as well as its strategy to prioritize value over volume and saturation. , if any, that they identify,” said Swetha Ramachandran, who manages GAM’s Luxury. Brand Equity Fund.

Months after Vigna, 53, started as CEO, Ferrari shook up its organizational structure, bringing in several executives from its former employer, and teamed up with chipmaker Qualcomm Inc. to work on more digital car cockpits. At STMicro, he led the division that supplies sensors for Apple Inc.’s iPhone and automakers’ navigation systems.

Big spending could be needed before Ferrari launches its first purely electric vehicle in 2025, with Citi analysts saying they expect “structurally higher investments to weigh on returns”. Redburn also warned that investors may be surprised by the scale of the outlay required.

“Ferrari has looked a little less outstanding in recent years, with returns that have topped all-time highs and competitors that have upped their game,” Jefferies analysts wrote in a May 30 note. The upcoming event for investors is “an opportunity to regain leadership and better understand why John Elkann appointed outsider Benedetto Vigna, to ‘reinvent’ Ferrari.”

(Updates with share reaction in fourth paragraph.)

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