Inside Ferrari’s plan to enter the electric-car market

Ferrari Daytona SP3
Ferrari Daytona SP3

Summary

The luxury sports-car company aims to start selling a fully electric vehicle in 2025. Can it do that and still be Ferrari?

Ferrari NV has been making luxury sports cars in the same factory in northern Italy for 75 years. The company’s hometown, Maranello, holds almost mythical status for motorheads, and is a pilgrimage destination for Ferrari owners and aspirational owners who arrive by the thousands every year.

Now this paragon of tradition, style, quality and luxury is facing perhaps its biggest challenge ever: the shift to fully electric models. This evolution is a test for all of the car industry, but it has existential contours for Ferrari, which is steeped in tradition and made a name for itself with powerful, and loud, internal-combustion engines.

To navigate this and a series of other challenges, Ferrari has turned to Benedetto Vigna, a car-industry outsider who took over as chief executive in September following more than a quarter-century at semiconductor manufacturer STMicroelectronics NV. Microchips are playing an increasingly important role in all aspects of the modern car from brakes to autonomous-driving features.

Mr. Vigna spoke to The Wall Street Journal about the car maker’s first fully electric vehicle, due in 2025; the launch of the Purosangue, its largest Ferrari yet; and the importance of the Formula One team to the rest of the business. Edited excerpts follow.

WSJ: Despite the importance of microchips in the modern car, many people were surprised when you were named CEO of Ferrari. What does a semiconductor expert bring?

MR. VIGNA: I brought a link to another world, a world that is increasingly important for the automotive industry. One of my former competitors in the semiconductor industry came here and showed me everything they are working on. He said, “I’m showing you because I know you can understand. That’s not common in the auto industry." The chips are part of a tectonic shift going on in the automotive industry.

Tracking trends

WSJ: What role will chips play in that shift at Ferrari?

MR. VIGNA: The trend for the car of the future is to be more autonomous, shared, connected and electric. Chips will play a role in all of that. There are some trends that make sense for us and others that don’t. Clearly we will have L2 [a classification that includes limited autonomous-driving features], but there won’t be a Ferrari that drives itself. We will have improved connectivity to offer a better experience, and clearly there will be electric Ferraris.

WSJ: What surprised you when you started at Ferrari?

MR. VIGNA: On the positive side, the passion and will to progress here are very strong. Testament to this are the many great ideas we constantly receive from workers. One proposal recently put forward was for a more efficient and sustainable use of energy and aluminum, all the more important in this period of inflation. On average, the energy used to produce a car was reduced by around 3% over the last year, and we aim to reach 5% by year-end.

What surprised me negatively, and what I have started to correct, is that even though this company isn’t big—we’re talking about 5,000 people—there were too many organizational levels. There were some meetings I was attending with suppliers that showed up with only two people and we were six or seven. And it was clear that the lowest-ranking person was running the show. So in some cases, like in R&D, there were seven people working on a project and now there are five.

WSJ: But you didn’t downsize. What do you hope your employees are doing with this extra time?

MR. VIGNA: I want them to be working on transformation. The leadership of a company must perform, but also transform. Perform is just execution, transform is more strategic. And to transform you need time to think.

WSJ: How does transformation happen?

MR. VIGNA: One way is to have people get input from outside the company, for example by attending training courses. I’m always bothering everyone about that.

WSJ: It’s a tough time for the car industry and the economy more generally. How is that affecting Ferrari?

MR. VIGNA: From a financial point of view, we don’t see any impact. In the future, we expect we will feel it. We will react accordingly if needed.

WSJ: Why has Ferrari been able to avoid the negative macroeconomic impact so far?

MR. VIGNA: We have seen some increases in energy and the costs of certain raw materials, mainly aluminum and precious metals. In light of this, we immediately took two actions to preserve our profitability. In fall of last year, we applied a price increase across our current product range. And we have set the price of our new models to adequately reflect our estimates of cost inflation.

WSJ: Ferrari’s first all-electric car will arrive in 2025. What has the company learned from making and selling your four plug-in hybrids?

MR. VIGNA: One point, the electric engine can enhance the performance of the thermal engine. No. 2, we’ve seen what the key dimensions are that you must pay attention to when you want to make an electric Ferrari that is a true Ferrari.

Some customers with multiple Ferraris are saying they only want to drive their hybrid car because of the combination of the two engines. Customers understand that electric is a technology we are using to enhance performance and it isn’t being forced on us.

WSJ: At your recent capital-markets day with analysts in June, you said an electric Ferrari is still going to be a Ferrari. What does that mean?

MR. VIGNA: We will look at three dimensions: design, performance and emotion. We will always have a unique design. On the performance side, we’re looking at aerodynamics and the efficiency of the engine. On the emotional side, we are looking at the sound and the way you feel the acceleration.

Electric sound

WSJ: Some Ferrari enthusiasts are worried about the sound, or should I say silence, of the electric engine. The roar of a Ferrari engine is legendary for some people.

MR. VIGNA: Each motor has its own sound. So we will have an electric engine with its own sound. People believe that the electric engine is silent, but it isn’t. There are ways that we can extract a unique sound from the electric engine without using electronics. We are working on that and we are patenting it.

WSJ: In September, you will present the Purosangue. Your predecessor refused to call it an SUV and you won’t either, even though that’s the segment it will be competing in. Why is that?

MR. VIGNA: In the last seven or eight years I’ve been driving high-end SUVs. The way you sit in an SUV is completely different compared with a sports car. When you sit in a Purosangue, you feel like you’re in a sports car.

WSJ: Who do you think will be the typical customer for this larger Ferrari?

MR. VIGNA: It’s early days yet, but we are seeing immense interest from clients who want more room in a car and more space for passengers, but who don’t want to renounce the feeling and the performance of a sports car. We expect it will attract both Ferrari owners and new customers.

WSJ: Former CEO Sergio Marchionne used to say how important it is for the company to win on the Formula One track. Yet the racing team had a long run of bad years, and in that period sales and profit didn’t suffer. How convinced are you of the importance of the F1 team to Ferrari’s image and marketing?

MR. VIGNA: Racing is part of the DNA of this company. It has been and it will always be. It is the glue that keeps everybody here together and promotes the sense of belonging and the passion. It reminds the people who work here of the importance of timing, of paying attention to detail and that everything must work together perfectly.

As far as the correlation or causation between the success in Formula One and sales, we have never seen a direct relationship. That said, there is a link, as F1 is a fundamental driver of the popularity of the brand and business. And if we win a race on Sunday, it’s a morale boost for all of us when we go back to work Monday morning.

 

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