Bugatti, Maker of $19 Million Supercar, to Go More Affordable

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Stephan Winkelmann, chief executive officer of Bugatti Automobiles SAS, introduces the Bugatti La Voiture Noire ultra luxury automobile
Stephan Winkelmann, chief executive officer of Bugatti Automobiles SAS, introduces the Bugatti La Voiture Noire ultra luxury automobile on the opening day of the 89th Geneva International Motor Show in Geneva, Switzerland, on Tuesday, March 5, 2019. The show near Lake Leman, which opens to the public from March 7 to 17, will be the first gilded showcase of the year for the likes of Bugatti, Koenigsegg, Lamborghini, and Pininfarina, among others. Photographer: Stefan Wermuth/Bloomberg

Last week, during the Geneva Motor Show, Bugatti unveiled the world’s most expensive new car, a €16.7 million ($18.9 million) coupe made as a modern interpretation of the iconic Bugatti Type 57SC Atlantic. Ralph Lauren famously owns one of the originals, worth an estimated $40 million.

La Voiture Noire, French for “the black car,” is a one-off commission speculated to have been made for Ferdinand Piech, chairman of Volkswagen Group from 1993 to 2002. The car itself cost €11 million, though VAT and luxury taxes bumped up the final price.

But another bit of news will have far bigger reach than that black beast.

According to Bugatti President Stephan Winkelmann in an interview on March 6, the brand is looking to introduce a second, more affordable model of car to its current multimillion-dollar lineup. Winkelmann characterized it not as a mere halo car but as a best-in-segment daily driver with a top-line price to match—and it would be at least partially electric.

“There, I would see us doing a battery electric vehicle,” he said of the proposed new car. “There, the balance between performance and comfort is much more important, and it’s about daily usability. This is what I see.”

Face-melting speed “will be far less important” in the second car, he said.

This is a highly relative concept, considering that the $3 million Chiron comes with 1,500 horsepower and a top speed of 261mph. Any new Bugatti will still cost a lot: It stands to reason that even a far “lesser” creation could cost a half-million dollars and pack an 800hp punch.

Winkelmann declined to give additional specifics about the cost, chassis, and performance of the potential car but said the company has already begun analyzing the prospect. “Let’s see what we can do,” he said. “I’m hoping for the best.”

There is room to expand, even with the generous business that million-dollar cars such as the Bugatti Chiron and Divo already provide. The average Bugatti customer has 42 cars at home, according to a Bugatti spokeswoman; often two of them are Bugattis. More than half of the 250 Chirons made were purchased sight unseen—an astounding figure, considering the astronomical price tag.

In North America and Europe, billionaire populations are growing by 17 percent and 18 percent respectively, according to Knight Frank’s 2019 Wealth Report. Asia will be home to 1,003 billionaires by 2023, a 27 percent increase from 2018 and more than a third of the world’s total of 2,696 billionaires. Since 2009, sales of automobiles costing more than $180,000 has quadrupled, according to IHS Markit.

Matt DeLorenzo, senior managing editor for Kelley Blue Book, characterizes the move to bring in a second model lineup as smart, matching the VW Group’s overall push toward electrification. “They do need to remain relevant within the group,” he says.

“At the end of the day, the difference of the price in a car is the brand,” Winkelmann said of how the new model may be positioned. “And this, I think, will stay the same—fortunately for us. I’m convinced about this.”

Tim Urquhart, the principal automotive analyst at IHS Markit, casts doubt as to whether the new model will be hugely profitable, despite strategy shifts from new VW Chief Executive Officer Herbert Diess. Instead, “relevancy is the more important question,” he says, especially when the brand story matters as much as the product—and when hybrid and purely electric vehicles have utterly dominated automotive news for the past few years.

Audi, BMW, Mercedes, Jaguar, and Porsche have all announced electric cars, to be produced now or in the near future. Tesla’s electric vehicles continue to move from strength to strength, against all odds. Cities such as London and Paris are becoming increasingly hostile to combustion-driven engines. And the technology needed to get a two-ton Chiron to sustained performance and extended range under battery power alone isn’t feasible, due to weight and cost constraints.

In short, an electric Chiron would be a compromised Chiron, Winkelmann says. That’s why, in order to introduce electric technology into Bugatti, it must come in the form of a new car altogether. “I would see [electric power] there because I don’t need a top speed, which is over 250 mph,” he said.

Bugatti would hardly be the first classic brand to attempt to evolve and achieve relevance via electric and/or half-practical vehicles. Ferrari and Lamborghini long eschewed deigning to make less-expensive sports cars and (gasp) SUVs in volumes that would bolster their tiny global outputs (formerly sub-5,000 units). More recently, Lamborghini incorporated the Urus SUV into its lineup, and Ferrari executives said last week in Geneva that they are working on a hybrid supercar of their own. (Ferrari introduced the hybrid LaFerrari six years ago.) These moves had no discernible negative impact, in terms of “damaging” a storied brand.

The true challenge will be to develop an electric vehicle with either significantly improved range or more exotic technology than the much-hyped Porsche Taycan, another sibling in the VW Group family and one that will be on the road before the end of 2019. Any new vehicle from Bugatti would likely borrow extensively from VW Group hardware such as the Premium Platform Electric architecture to be used by Porsche, Bentley, and Audi. But with a badge like Bugatti’s, it had better provide an amplified experience.

“Whatever the technology of the day is, Bugatti would be expected to take it up a notch,” Kelley Blue Book’s Delorenzo said.

In the meantime, a lot can happen. Even if Winkelmann gets the green light from Volkswagen AG, the prospect of an underling Bugatti remains far from reality. He doesn’t yet have approval from the Volkswagen board, and this can be difficult to procure. It took years of lobbying from Bentley and Lamborghini to get go-aheads to make an SUV. (For the record, Bentley “won” that battle: It won clearance to make its Bentayga before Lamborghini produced the Urus.)

If and when Winkelmann gets a yes, it will take an additional four years of development before a second Bugatti family line can hit the road.

Might as well start saving money now.

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