Ferrari shares fell after the luxury carmaker unveiled its first full EV

Shares of the luxury car maker Ferrari dropped sharply on Tuesday morning, shortly after the company unveiled its first fully electric car.

The Maranello, Italy-based sports car manufacturer unveiled Luce, which translates as “light,” in the Rome area, explaining the choice of name as one that “expresses clarity and direction.”

The highly-anticipated model marks a departure from the luxury of standard Ferraris and comes as other luxury carmakers, notably Porsche and Lamborghini, have backed off plans to launch their own EVs due to weak demand.

Shares in Ferrari were last seen down 6.3% on Tuesday morning, covering their earlier losses. The Milan-listed stock has fallen nearly 27% in the past 12 months.

Ferrari CEO Benedetto Vigna described the launch of the Luce model as a “very important day” for the company, symbolizing the opening of a “new chapter” in its history.

When asked if the company can satisfy new customers as well as its regular customers, Vigna told CNBC’s Charlotte Reed: “Look, when you’re doing a new technology, you need to remember a word called respect.”

“Respect for technology, because if you have new technology, you must make sure that that technology is properly represented in the design, so the design must be different,” he added.

Vigna said the car maker respects the different needs and wishes of their customers, adding that existing customers will appreciate the Luce and the company will welcome new customers because of the fully electric model.

Ferrari’s first ever five-seater, the Luce model can hit 60 miles per hour in about 2.5 seconds and has a top speed of 192 miles per hour.

The Luce is priced at around 550,000 euros, (about $640,000), and customer deliveries are scheduled to begin in the fourth quarter of the year.

Ferrari said it chose to develop and manufacture all the interior items in Maranello, and the design was entrusted to LoveFrom, an agency founded by former Apple design chief Jony Ive.

Analysts attributed the share price reaction to a mix of “design hate” and the old market adage of “go and come,” noting that Ferrari’s stock price rose sharply ahead of Monday’s launch.

“Ultimately, many fans are disappointed that Ferrari is embracing the EV concept, believing it undermines the supercar brand, which has equated itself with classic design and combustion engine power,” Michael Field, chief equity strategist at Morningstar, told CNBC in an email.

“From an investment point of view, many investors were afraid of the development of the EV model, on the basis that the research and development costs are too high, putting a lot of pressure on the product to return these, and possibly reducing the investment returns of the business,” said Field.

Anthony Dick, motor analyst at Oddo BHF, said the stock price reaction was “the sharpest action we’ve seen in a car design – the market has spoken.”

Reflecting on market concerns and business risks if Ferrari’s launch of a new model could fail, Dick cited the impact on brand equity, noting that Luce notes “the farthest deviation from brand practices we’ve ever seen,” and the potential impact on profits if the model doesn’t actually sell.

Ferrari’s Vigna said the Luce model will offer Ferrari drivers “the same feeling” as the regular model but the most important sound of the car is the one associated with the electric engine and “each engine has its own sound.”

“What is important is the feeling that exists [being given] to the driver,” he added.