When a new car’s design is said to be “divisive”, that means normal people hate it. Italian luxury sports car maker Ferrari , probably correctly, assumes that not many normal people have $650,000 available to buy its new Luce electric car, so success is likely despite the media’s “divisive” verdict.

Investors didn’t like the initial vibes generated by the Luce either, as Ferrari unveiled its first electric vehicle on Tuesday. The shares lost up to 8% on the first day. The shares steadied on Wednesday, gaining 0.28% at €284.85, according to Reuters.

Analysts thought the initial negativity was overdone, and that the Luce (“Light” in Italian) would probably go on to achieve traditional Ferrari profit margins.

Negative reactions were not just from the media.

“We risk destroying a legend, and I’m truly sorry about that. (the Luce was) certainly a car that at least the Chinese won’t copy,” said former Ferrari chair Luca di Montezemolo, according to Automotive News Europe. “I hope they at least remove the prancing horse from that car.”

Ferrari’s famous logo features a prancing horse.

Anything but a Prancing Horse

Italian Transport Minister Matteo Salvini said the Luce was “anything but a Prancing Horse car”, according to Reuters Breaking Views .

Others said the Luce looked more like a mass-market Nissan Leaf, not a target purchase for the super-rich.

Relatively unsuccessful competitors like Aston Martin and Volkswagen’s Lamborghini must have felt some justification. Aston Martin has delayed its first EV until at least 2030. Lamborghini plans just a plug-in hybrid as its gesture towards electrification.

Breaking Views summed up investor worries.

“Ferrari’s new Luce is a pivotal moment for the €50 billion ($58 billion capitalization) Italy-based group, and the luxury car sector in general. The big question is whether people who pay hundreds of thousands of euros for growling gas-guzzlers will also shell out for electric versions. If not, prices may fall, and secondhand values may depreciate, which will damage the brand,” said Breaking Views columnist Neil Unmack.

But Unmack said the Luce will probably be a success.

“Die-hard Ferrari fans will want to own every model, even those they don’t love, in order to qualify for (to buy) the ultra high-end supercars. And the Luce may well appeal to some buyers who don’t buy traditional Ferraris, think Silicon Valley executives,” Unmack said.

When Ferrari launched its first SUV, the Purosangue in 2022, much angst was expressed by traditionalists. It has become a big success.

HSBC Global Investment Research said Ferrari investors will have to wait and see if the Luce is a success.

“Ferrari takes a big swing with the Luce. Controversy was expected; now management needs to deliver on orders,” HSBC Research said in a report.

HSBC rates Ferrari as a “hold”

The report said Ferrari realized the Luce would not necessarily appeal to existing owners, but it was surprised by the venom of the reaction. The Luce’s costs were kept down by using many parts from other models, including the F80’s front axle, the rear drive and suspension from the Purosangue.

Investment researcher Bernstein, which rates Ferrari “Outperform”, said it was not surprised by the initial fall in the Ferrari share price.

“Ferrari has not embarked on this blindly and we know that much curiosity has been generated by the Luce. The design has been developed by two of unarguably the most successful industrial designers of the last two decades (Apple Mac, iPod, IPhone, iWatch) and Ferrari has one of the strongest feedback loops with its buyers,” Bernstein said in a report.

Luce likely to establish itself

“Ferrari never reveals its targets or the actual sales of any of its range cars; we believe there are sufficient collectors and completeists, customers aspiring for collector status (and the access that provides to Ferrari’s unicorns like its Supercars and Icona models) as well as new to Ferrari customers to ensure that Luce firmly establishes its position within Ferrari’s range,” according to Bernstein.

Meanwhile, Ferrari published the Luce’s basic specifications, some of which are –

Torque – 990 Newton metres

Acceleration – 0-60 mph 2.3 seconds

How will range react to relatively high-speed autoroute cruising? According to ChatGPT calculations, at a steady 80 mph, the Luce will shed about 32% of range, cutting it to 225 miles. At about 90 mph on an unlimited German autobahn the range will be cut by about 44% to around 185 miles, according to ChatGPT.