Ferrari dreams of electric cars, could be nightmare for investors

Investment firm Goldman Sachs Inc says that the transition to electric cars comes with uncertainty and may impact Ferrari's earnings.The appointment of Benedetto Vigna from chipmaker STMicroelectronics NV as the CEO demonstrates Ferrari's commitment to electrification.
By
| Updated on: 14 Jun 2021, 05:35 PM
the logo of Ferrari. (File photo)
the logo of Ferrari. (File photo)

Ferrari NV’s plan to go green could be costly for investors in the short term, according to Goldman Sachs Inc. The broker flipped its recommendation on the supercar maker to sell from buy Monday, citing the firm’s efforts to launch a battery-powered vehicle by 2025, alongside weaker volume expectations for existing models.

Similar Cars

Find More Cars
Hyundai Kona Electric (HT Auto photo)
Hyundai Kona Electric
cc | Electric | Automatic
₹ 23.79 Lakhs*Onwards
Ferrari Portofino (HT Auto photo)
Ferrari Portofino
3855 cc | Petrol | Automatic (Dual Clutch)
₹ 3.5 Cr*Onwards
Ferrari Roma (HT Auto photo)
Ferrari Roma
3855 cc | Petrol | Automatic (Dual Clutch)
₹ 3.76 Cr*Onwards
Ferrari F8 Tributo (HT Auto photo)
Ferrari F8 Tributo
3902 cc | Petrol | Automatic (Dual Clutch)
₹ 4.02 Cr*Onwards
Ferrari 812 (HT Auto photo)
Ferrari 812
6496 cc | Petrol | Automatic (Dual Clutch)
₹ 5.2 Cr*Onwards

“While we would view any Ferrari push to be at the forefront of evolving technologies positively in the long-term, for investors today, the transition brings uncertainty around potential future capital expenditure requirements, and their implications for earnings and free cash flow," analysts including George Galliers wrote in a note Monday.

(Also read | Ferrari launches its first ever high-performance-fabric fashion collection)

Goldman lifted its estimate for Ferrari’s capital spending by 42 million euros ($51 million) a year on average through 2030. Still, the broker sees the EV push as necessary for future growth. “While the internal combustion engine and chassis and suspension systems have been core automotive technologies in the past, it is clear that a very different set of technologies will be core technologies in the future," the bank wrote.

(Also watch: Rare Ferrari F40 supercar destroyed after catching fire in Japan)

The appointment of Benedetto Vigna from chipmaker STMicroelectronics NV as chief executive officer further demonstrates the company’s commitment to the technology transition, Goldman said. Ferrari shares slipped as much as 2.9% to 168.90 euros on Monday, taking their year-to-date decline to about 10%.

First Published Date: 14 Jun 2021, 05:34 PM IST
NEXT ARTICLE BEGINS

Provide some basic details and Get Personalized offers for

Choose city
+91 | Choose city
Choose city
Choose city
By clicking VIEW OFFERS you Agree to our Terms and Privacy Policy

Dear Name

Please verify your mobile number.

+91 | Choose city