Not Worried About Ferrari’s EV’s
Over the past four years, we have watched a really interesting evolution in electric vehicles. After about a decade of slow, grinding progression, it felt like electric vehicles had finally caught, like the moment had finally happened. And companies did not want to miss out. Investors, executives, and governments all pushed car manufacturers towards electrics for two reasons. Investors and executives were fearful of missing out on a technological wave, and companies like Ford saw a chance to reclaim some lost power. Governments were making green pushes, and newly elected Democrats got caught up a bit in what their voter base wanted, which was a greener world. Not that they were wrong in any way, but there was definitely some pressure from voters. The federal government went a little crazy with its subsidies and tax credits for both manufacturers and consumers.
That was the peak for sure. Then, companies started pushing out so many electric cars, and consumers did not love them. Smarter companies like Toyota (shout out to the 4Runner) opted for the hybrid route, which was much more popular. Companies and governments went too soon and too hard on wholly electric vehicles. But out of that pain, came a valuable lesson, if you are going to incorporate electric, you should go the hybrid route.
By now, after the peak and the trough, I feel like most, if not all, car manufacturers have retreated from the solely electric route. There are not too many brand-new electric car manufacturers like Rivian picking up steam, and Fisker (a really bad electric car company) even went bankrupt. It felt to me that the market had cooled, and after the quick and aggressive jump, a slow buildup was inevitable over the next three to five years, with smart companies like Toyota profiting.
So, you can imagine my shock when I saw that Ferrari, my second largest holding (19%), was releasing a solely electric line. If this were any other car company that was this overvalued according to the fundamentals and simultaneously released into a sector that has eaten other car companies alive, I would be out of there, but I trust Ferrari for two reasons.
When I was explaining why I love this stock and company, one of my main reasons was Benedetto Vigna. Vigna has three things in his possession: an excessively Italian name, a spectacular vision, and an excellent feel for the company. If anyone were to pull an electric push-off, it would be him. I trust his ability to not cut corners, his ability to spend the right amount of money to pull this off, and his ability to make the right electric car.
I also trust the Ferrari customer not to blink. I think Ferrari customers love the brand above any other brand. They love the power the cars have and the status a Ferrari conveys. Also, when you are customizing/designing your Ferrari, you have the option to pick one of three options, all made in the same recently built plant, by the way. The normal internal combustion engine (ICE), a hybrid, and an electric powertrain, so this isn’t like Dodge for example, who just changed all their Challengers and Chargers to electric, without an option to pick, a very poor decision.
Ferrari has been planning this for a while. That plant they built to make all three versions of the Ferrari engine was $215 million, so this has been a plan for a while, but Ferrari is well positioned because they have already witnessed some critical errors in this field that others have made. Their decision to manufacture all three versions in one plant, for example, is a very wise decision that was reaped from other’s mistakes. Do not fret, Ferrari is too smart of a company to mess this up (he says to himself).
