The last company that should be feeling good about the dawn of the electric vehicle age, you might think, is Ferrari, whose legacy is built on its roaring, petrol-guzzling engines.
So why, while the valuations of most big European carmakers have fallen hard in recent years amid investor fears of Chinese EV competition, has Ferrari bucked the trend – meaning it’s now worth more than Volkswagen, which makes nearly 700 times as many cars?
This week’s unveiling of the Luce, Ferrari’s first electric car, drew a rough reception. “We’re risking the destruction of a legend,” complained former Ferrari chair Luca di Montezemolo (who is now a director at rival McLaren). The company’s shares fell 8 per cent as car buffs attacked the car’s appearance, crafted by iPhone designer Jony Ive, and its price tag of €550,000.
Yet even after this week’s hit, Ferrari is comfortably the most valuable carmaker in Europe – something that would have been hard to imagine five years ago, when its market capitalisation was roughly a quarter that of Volkswagen, the continent’s biggest auto producer by volume.
RM Block
Since then, Ferrari’s valuation has risen 71 per cent to €57 billion.
Over the same period, that of VW – which made nine million cars last year to Ferrari’s 13,640 – has fallen 59 per cent to €51 billion. The valuation of Stellantis – owner of brands including Peugeot, Fiat and Jeep – is down 57 per cent to €21 billion.
Ferrari’s sorpasso of VW highlights an interesting dynamic in the global shift to electric cars, which is affecting Europe’s luxury and mass-market brands in very different ways.
Last week, the International Energy Agency’s annual Global EV Outlook projected that EV sales would reach 23 million this year – up from 20 million last year, and 17 million the year before.
[ Ferrari’s first electric car is courting controversy at 310km/hOpens in new window ]
True, this year’s projected EV sales would amount to a seemingly modest 28 per cent of the total new car market. But the stark fact facing incumbent western and Japanese carmakers is that the global market in combustion-engine cars, where they’ve long dominated, has been in structural decline since 2017 – while the electric car market, where Chinese companies are strongest, is growing fast.
Chinese carmakers accounted for 60 per cent of global EV sales last year, according to the IEA. European and North American producers accounted for just 15 per cent apiece.
A recent study by Rhodium Group explained the factors behind the cost advantages that are driving this dynamic. State support for Chinese carmakers – loudly criticised by the United States and the European Union – has played a role. But a bigger factor, it found, is the vertical integration of car production in China, which dominates large parts of the low-carbon technology supply chain.
“Closing the cost gap would require western [carmakers] to follow a difficult path – investing more deeply in China to build local R&D and supplier ties, while cutting costs and jobs at home,” Rhodium warned. The likes of VW are already pursuing this approach, increasing exports to Europe and elsewhere from their Chinese operations and joint ventures.
The EU has been trying to protect production at home by imposing targeted tariffs on Chinese EV imports. Its proposed Industrial Accelerator Act, published in March, would impose new “Made in Europe” rules for EV subsidies.
Yet it’s far from clear that any of this can restrain the dramatic rise of Chinese EV exports, which increased by 48 per cent in the first four months of this year (and by 69 per cent in Europe).
So why should luxury-car makers feel any better about this than mass-market ones? A revealing recent statement by Stephan Winkelmann, Lamborghini’s chief executive, gives a clue. When his customers buy a Lamborghini, “they’re buying into a dream and not mobility”, Winkelmann told the FT’s Future of the Car summit earlier this month.
Most car buyers seek a vehicle that will get them from A to B comfortably and at a reasonable cost. Luxury car buyers are looking for something else: fun, aesthetic appeal, or envious gawps from pedestrians, at an eye-watering price.
[ Ferrari marks high-stakes shift with first fully electric carOpens in new window ]
Mass-market European carmakers are struggling to explain to investors how they will compete with Chinese rivals who can produce cars of similar quality at lower cost. The likes of Ferrari are avoiding this head-on competition by producing ultra-high-end cars for people who don’t view lofty price tags as a problem.
As long as the concentration of global wealth keeps growing, so will Ferrari’s target market. The world’s billionaire count has now passed 3,400, according to Forbes – up 64 per cent since 2020.
This doesn’t mean the path ahead for these luxury carmakers will be straightforward. A slowdown in their sales in China – though less severe than suffered by their mass-market counterparts – is an ominous sign (which has contributed to a substantial drop in Ferrari’s share price from the all-time peak it reached last year). And they’ve been pursuing a contrasting range of strategies in response.
UK-based Jaguar, owned by India’s Tata Motors, is going all-in on electric vehicles, having produced its final combustion-engine car last December. Other luxury brands, including Rolls-Royce, Lotus and Porsche, have been scaling back the planned pace of their EV shift. VW-owned Lamborghini has cancelled plans for a fully electric car, and will develop a plug-in hybrid model instead.
Ferrari, meanwhile, has reduced its EV sales target to 20 per cent of its output by 2030, from an earlier goal of 40 per cent. Meeting even that reduced ambition will require a strong reception for the Luce among wealthy buyers, in contrast with the negative initial public response.
If it’s possible to get the super-rich to spend high-six-figure sums on electric cars, Ferrari may have the best chance of pulling it off. “We believe there are sufficient collectors ... as well as new-to-Ferrari customers to ensure that Luce firmly establishes its position within Ferrari’s range,” argue analysts at Bernstein.
If not, supercar makers can expect demand for their combustion engines to decline more slowly than in the mass market, where the cost advantages of EVs are becoming increasingly clear as battery technology advances. Even in the EU, with its forthcoming restrictions on combustion-engine cars, there is softer treatment for producers with annual sales in the bloc of fewer than 10,000 vehicles.
This may have been a bruising week for Ferrari’s management. But compared with most of their fellow European auto executives, they’re in an enviable position. – Copyright The Financial Times Limited 2026
