Ferrari's Margin Resilience Amid Hybrid Growth Challenges EV Transition Fears

What happened

Ferrari has been steadily increasing its hybrid vehicle mix, with hybrid deliveries surpassing internal combustion engines for the first time in 2024, as noted in its filings. A recent Motley Fool article highlights that despite this shift, Ferrari's margins have actually risen, countering typical concerns about electrification costs eroding profitability. This aligns with Ferrari's FY2025 performance, which showed a 29.5% EBIT margin and strong free cash flow growth, even with flat shipments, per the DeepValue report. However, the report cautions that Ferrari's current valuation of 35.7x P/E already prices in such margin resilience, with near-term risks from U.S. tariffs and the Luce EV launch. Thus, while the news reinforces Ferrari's execution, it does not change the overarching narrative of high stakes in the coming months.

Implication

The margin increase despite higher hybrid volumes suggests Ferrari's pricing power and cost management are effectively offsetting electrification expenses, which could support the bull case for a smooth EV transition. However, with the stock trading at a premium 35.7x P/E, this positive news is largely reflected in the price, leaving limited upside without further catalysts. Investors must closely watch the May 2026 Luce EV order opening as a critical demand signal, alongside Ferrari's ability to maintain margin guidance amid tariff pressures. The DeepValue report's WAIT rating remains relevant, as any failure in tariff mitigation or EV reception could significantly impair the stock. Therefore, while the margin trend is a green flag, prudent investors should wait for clearer execution on key risks before adding exposure.

Thesis delta

The news article does not alter the core investment thesis; it merely confirms existing data on Ferrari's margin resilience during its hybrid transition. The thesis remains that Ferrari must prove tariff mitigation and strong Luce EV demand to justify its high valuation, with no shift in the near-term catalysts or risks. Thus, the recommendation to wait for confirmation events, such as the Luce order opening and margin stability, stays unchanged.