Bugatti CEO Mate Rimac said the supercar market is entering its "Swiss watch phase," with the wealthiest buyers rejecting high-tech electronics and electric vehicles in favor of precision mechanics and hand-crafted details.
Rimac, the 38-year-old EV entrepreneur who took over Bugatti in 2021, said the car market is splitting in two: The mainstream global car market is becoming dominated by lower-priced EVs, many from China, while the very top of the car market will be driven by wealthy buyers who want more old-school cars with loud internal combustion engines and emotional appeal.
He compared the car industry to watches, where digital and smart watches have taken over most of the market, while high-priced Swiss mechanical options remain popular with the wealthy.
"For normal cars, normal people, the vast majority will be electric," Rimac said. "The upper segment, like sports cars and upwards, are going to stay combustion for a very long time, exactly like watches. Only like 5% of watches are made in Switzerland, but that's where 90% of profits are made. An Apple Watch or any kind of smart watch can do so many more things. But no one will pay $200,000 for it."
The Inside Wealth newsletter by Robert Frank is your weekly guide to high-net-worth investors and the industries that serve them.
When Rimac's EV startup, Rimac Group, gained control of Bugatti from Porsche and Volkswagen in 2021, many expected the newly formed Bugatti Rimac Group to launch an electric Bugatti.
Instead, Rimac built an entirely new car powered by one of the largest naturally aspirated combustion engines ever built for a production car. The hybrid Tourbillon has an 8.3-liter V16 that delivers 1,000 horsepower, combined with electric motors for a total 1,800 horsepower.
"It's kind of ironic that I'm now making the world's biggest combustion engine," he said. "You have the crazy situation now at our facility in Croatia. On the same production line, you have the world's most powerful electric car being built right next to the world's biggest combustion engine. Life is strange sometimes."
Bugatti will make only 250 Tourbillons, which are sold out at a starting price of roughly $4.5 million. Rimac said the average Tourbillon customer adds another $600,000 to $700,000 in personalization add-ons, like special paint colors, leathers, stitching and other design features.
The rise of personalization and customization has become one of the biggest profit drivers at supercar companies like Bugatti, Ferrari and Lamborghini. Supercar companies are also launching special one-off cars for their top customers that can cost tens of millions of dollars. At Monterey Car Week, Bugatti unveiled its latest one-off, called Destrier, which reimagines its track-based Bolide model with a lower stance, larger wheels and sculptural body work.
Rimac said customizations and one-offs reflect a growing desire among today's wealthy to have unique objects that reflect their identity.
"For these clients, they want something that's really theirs, that's connected with them," Rimac said. "It tells their story, their personality, their preferences, not just like a car. It's a story behind it."
Rimac said his goal for Bugatti is to continue to boost production, quality and profits, while also retaining exclusivity. He said production will never go higher than "the low three-digit numbers."
The company earned 200 million euros (US$233 million) in earnings before interest, taxes, depreciation and amortization last year and will continue to grow profits, Rimac said.
Porsche AG agreed in April to sell its 45% stake in Bugatti Rimac to a global consortium led by HOF Capital. While some reports cited a valuation of over $1.1 billion for Bugatti, Rimac said the valuation is "substantially higher" than $2 billion.
"What I want to do is make the world's best cars, the most exciting cars in the world, and have the world's most profitable car company on a percentage basis," he said.
Rimac said that in the age of artificial intelligence, autonomous vehicles and EVs, the guiding principal for Bugatti will be the human factor.
"You can get a car that's faster than any performance car from 10 years ago for like $50,000 from China," he said. "Performance is really becoming secondary. It's more about what I call the celebration of human skills. When you look at these cars, you see the amount of ingenuity and art and beauty. The car is, like, the most complex object you can buy. It's art, but it's art that needs to go 250 miles per hour and be safe, have downforce and survive in a crash test and go in the snow and extreme heat, and all those things."
