Bugatti CEO Mate Rimac argues that the supercar market is entering a "Swiss watch phase," where wealthy buyers prioritize precision mechanics and handcrafted details over advanced electronics and electric vehicles. He states that while the mainstream car market will be dominated by affordable EVs, particularly from China, the upper segment, including sports cars, will retain combustion engines for an extended period. Rimac illustrates this with the analogy of Swiss watches, noting that while they constitute only 5% of watches, they generate 90% of profits, despite smartwatches offering more features.
Rimac, who took over Bugatti in 2021, surprised many by developing the hybrid Tourbillon, a car powered by an 8.3-liter V16 engine delivering 1,000 horsepower, combined with electric motors for a total of 1,800 horsepower. Only 250 Tourbillons will be produced, all of which are sold out at a starting price of approximately $4.5 million. Customers typically spend an additional $600,000 to $700,000 on personalized features like custom paint, leather, and stitching.
The trend of personalization and customization is a significant profit driver for supercar companies such as Bugatti, Ferrari, and Lamborghini. These companies also create unique, one-off vehicles for top clients, which can fetch tens of millions of dollars. Rimac emphasizes that these customizations reflect a growing desire among the affluent for unique possessions that express their identity. He aims to boost Bugatti's production, quality, and profits while maintaining exclusivity, with production numbers never exceeding "low three-digit numbers."
Last year, Bugatti recorded 200 million euros ($233 million) in earnings before interest, taxes, depreciation, and amortization, with expected continued profit growth. Rimac stated the company's valuation is "substantially higher" than $2 billion, surpassing earlier reports of over $1.1 billion. He believes that while affordable EVs from China can now outperform hypercars from a decade ago, the appeal of high-end supercars lies in the "celebration of human skills," artistry, and engineering complexity required to build a vehicle that is both a work of art and capable of extreme performance and safety.
Despite Rimac's focus on combustion for supercars, there's a broader trend of hybrid cars gaining popularity globally. Global EV sales are slowing due to high prices and charging infrastructure issues, making hybrids more attractive. Hybrid sales are projected to increase in China, India, and the U.S., potentially accounting for up to 40% of global car production by 2030. In the U.S., hybrid sales reached 14% of new cars last year, up from under 3% in 2020, and are expected to more than double. In Spain, hybrids constitute almost half of new car sales, and over half in Japan. This indicates a growing demand for hybrids in the general automotive market, even as the high-end supercar market, as envisioned by Rimac, might diverge.
