Should Italy drive a Fiat or a Ferrari?

Should Italy drive a Fiat or a Ferrari?

Automotive News Europe — 2024-02-09

Automotive Industry

The past several weeks have been truly eventful for the automotive sector in Italy, with an escalating war of words between the first right-wing government since 1948 and the country’s only volume automaker, Stellantis.

It started in late January, when Stellantis CEO Carlos Tavares said that Italy's hard line on EV incentives has meant lost production at the company's Mirafiori plant, where it builds the Fiat New 500 EV. In addition to Fiats, Stellantis builds Jeeps, Maseratis and Alfa Romeos in Italy (and soon Opels and DSs). 

Prime Minister Giorgia Meloni responded two days later, criticizing Stellantis as wanting to move production to lower-cost countries at a time when the auto industry is struggling to shift to electrification. 

In an interview with Bloomberg on January 31, Tavares fired back at Meloni, saying Italy should do more to protect auto jobs instead of looking for scapegoats and attacking Stellantis.

The next day, Adolfo Urso, the minister for industry and Made in Italy, announced a new round of scrapping incentives to promote EV adoption that, if approved, could total more than €13,500 for lower-income families.

The move would be more than welcome in Italy, where electric vehicles’ market share was just 4.2%. That figure lags countries such as Bulgaria, Cyprus and Greece – and it is far behind the European average of 14%. In comparison, EV share is 18% in Germany and 17% in France.

Italy’s current incentive plan offers few reasons to buy an EV. Buyers who scrap an older, high-emissions vehicle get €5,000 for an electric car, just 3,000 more than if they buy a new internal-combustion model with Carbon Dioxide emissions of 61 to 135 grams per km. (As a reminder, the EU fleet target is 95 g/km.)

As Urso presented the plan, he took his own shot at Stellantis, saying that the Italian government was ready to match the 6.1% stake that France holds in Stellantis if it could help to better protect jobs in Italy. Such a statement is pure propaganda ahead of crucial EU elections this spring, firstly because the Italian government doesn’t have the extra €4.3 bn  it would need to buy a 6.1% stake in Stellantis, whose market capitalization is close to €70 bn.

It would also go in the exact opposite direction of what Meloni’s government is trying to avoid: Taking more money from taxpayers’ pockets in a slow economy, then selling stakes in previously privatized public utilities to prevent a tax increase.

The minister of economy and finance, Giancarlo Giorgetti, an expert in economic matters, on Friday put the last nail in the coffin for Urso’s idea. “If the government would consider buying a stake in an Italian automaker, I would rather prefer Ferrari to Stellantis,” he was quoted as saying.

On that point, Giorgetti is absolutely right. Looking to potential return on investment, buying into Ferrari would be the best call. Spun off by Fiat Chrysler Automobiles in 2016 for what at the time seemed a crazy valuation --€10 bn including debt – eight years later Ferrari is worth almost €69 bn. 

That market cap is just €1 bn below that of Stellantis, created in 2021 in the merger of Fiat Chrysler Automobiles and PSA Group.

The furor seems to have calmed for now. But it is a reminder that automakers poke at government policy at their own peril – and vice versa.