Saturday, June 22, 2024

Ferrari will now let you pay for your new car with crypto, and the brand is expanding the service to Europe at the request of wealthy customers

Must read

Ferrari is one of the world’s most exclusive brands, which means it can pick and choose which of the customers beating down its doors will get the keys to the next luxury sports car proudly bearing its signature prancing horse on the grill. 

So news out of its Maranello headquarters that the Italian manufacturer now accepts cryptocurrencies as payment for its vehicles makes the announcement that much more unusual—not even Elon Musk’s Tesla offers that option.

“This will help us connect to people who are not necessarily our clients but might afford a Ferrari,” the company’s sales chief, Enrico Galliera, told Reuters in an interview published on Saturday.

In order to avoid being hit by volatile swings in the price of Bitcoin’s BTC and Ethereum’s ETH—two of the three currencies it will accept alongside Circle’s USDC stablecoin—it will offload the risk to BitPay, a major provider of crypto payment services.

That way Ferrari avoids having to hold tokens on its own balance sheet, exposing its investors to crypto market risks like those emanating from last year’s collapse of TerralunaCelsius3AC and most importantly FTX.

“This was one of our main goals: avoiding, both [for] our dealers and us, to directly handle cryptocurrencies and being shielded from their wide fluctuations,” Galliera told the news agency. 

Given the anonymity provided by digital wallets—which heightens their appeal for shadier elements in society—BitPay will ensure that the payments are not illicitly gained money laundered for the purposes of organized crime or tax evasion.

Galliera said the decision, which resulted from requests by dealers and customers, would be limited to the U.S. market initially, but it plans to add Europe early next year. 

Famous for its mid-engine V12 supercars like the Enzo and La Ferrari, the company recently launched the first four-door model in the brand’s 84-year history, the Purosangue crossover. 

This departure from its strict devotion to coupes, once considered unthinkable, enables it to poach customers away from the Lamborghini Urus, Aston Martin DBX and Bentley Bentayga.

The rapidly growing luxury crossover segment is popular in China, where demand for the kind of two-door luxury sports cars, in which Ferrari specializes, underperforms versus other regions, such as the U.S.

Fortune contacted Ferrari for further details on its crypto payment plans, but could not reach a representative.

Tesla abandoned its brief foray into crypto car sales

Tesla briefly attempted in early 2021 to accept payments for its cars in BTC, after buying $1.5 billion worth of the digital coin, but the effort lasted only a few weeks. CEO Elon Musk subsequently yanked the offer, citing three exposés (including one from Fortune) revealing the voracious amount of energy the Bitcoin blockchain devours to power the compute-heavy consensus mechanism known as Proof of Work. 

Musk suffered several heavy impairment charges on the value of its BTC stake before liquidating the bulk of its remaining holdings last year. At the time he sought to placate his crypto-enthusiasts by claiming it wasn’t a vote against the technology but due to concerns he had about the “overall liquidity of the company“.

Since then, Musk has only allowed a handful of select Tesla branded items in its merchandising store to be sold in Dogecoin, despite being well known for his support of the technology and numerous requests from his community to bring the option back. 

Ferrari’s Galliera did not reveal how many cars it expects to sell through crypto, but he said the company wanted to launch this experiment in a universe whose popularity exploded during the pandemic. 

Every luxury brand needs to continuously rejuvenate its image to remain aspirational, and digitally-native Zoomers often have vastly different attitudes towards brands and products than any other generation before them.

This is especially true among younger consumers disillusioned by traditional finance, known as “TradFi”. Instead they turned to decentralized finance, or “DeFi”, like cryptocurrencies and other blockchain-based goods as a more appealing alternative.

“Some [customers] are young investors who have built their fortunes around cryptocurrencies,” Galliera said.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

More articles

Latest article