Mullen Automotive is an EV Car Maker Poised to Help Change the Planet

by Wall Street Rebel - James DiGeorgia | 10/26/2022 12:17 PM
Mullen Automotive is an EV Car Maker Poised to Help Change the Planet

Automakers Display New Models At The Los Angeles Auto Show

 

Mullen Automotive is a cutting-edge electric car company which offers dependable, environmentally friendly energy alternatives to lessen the potentially devastating effects of our dependency on fossil fuel.*

 

Our planet is in desperate need of help. The consumption of fossil fuels is associated with a number of negative impacts on the environment, including climate that is more unstable and hazardous, water and air pollution and damage to our soil. These catastrophic changes threaten our planet, its human and wildlife inhabitance and natural resources. We need dependable, environmentally friendly energy alternatives to lessen the potentially devastating effects of our dependency on fossil fuels.

Given the unpredictability of our current geopolitical state of international affairs, wishful thinking and ambitious goals are no longer adequate. The OPEC+ decision to sharply curtail oil production threatens to push prices to levels that tip the global economy into recession. We need practical, affordable answers if we are to have any hope of achieving a prosperous future. We need sustainable, clean-energy alternatives accessible now. Or, to satisfy our energy requirements, foreign powers will forever keep the United States and the rest of the globe as their hostages.

It was not uncommon to see a fantastic new technology company blast onto the scene like a rocket. Then, despite making significant progress toward profitability, their position was impacted by bad market conditions, as we have seen in the United States and the world's financial markets in 2022. Concerns about the company's new technology, it’s capacity to scale sales to profitability, and the fact that tech stocks carry higher risks mean that, regardless of how innovative they may be, new developmental stage tech businesses saw a greater decrease in value when the stock market fell.

Mullen Automotive (NASDAQ: MULN) is an under-the-radar electric vehicle (EV) company with enormous long-term growth potential, even though its stock is beaten-down. The "Mullen FIVE," which is the name of the upcoming first electric crossover vehicle to be produced by the company, will have impressive performance specifications such as a range of 325 miles, the ability to accelerate from 0 to 60 miles per hour in 3.2 seconds, and a maximum speed of 155 miles per hour.

Currently trading at $0.50, Mullen Automotive stock has lost more than 97% of its original value. Mullen is a company still in the development stage for the most part, but it is rapidly transitioning into the production stage, and it has the financial resources necessary to do so.

 

Despite the low price per share, Mullen Automotive (NASDAQ: MULN) is at a key turning point that I believe could send its share price right back to $16 a share in the next 24-36 months. My enthusiasm for Mullen Automotive stems from the company's involvement in a number of innovative projects and the development of cutting-edge technologies that, if commercialized, will cause a significant shift in the market for electric vehicles (EVs) and deliver substantial returns to its shareholders.

In addition, as of August 8, the company announced preliminary results for the third quarter results, revealing a favorable financial position but its strongest balance sheet ever, with approximately $99.0 million in cash and cash equivalents. The company has a total debt of just $11.0 million.

  • Asset growth of 391%
    • Asset growth was primarily from cash from financing activities along with increased property and equipment.
  • Positive working capital $27,656,446
    • Working capital was a positive variance due to the paydown in current notes and cash received from financing activities.
  • $318 million in financial commitments
    • The committed capital positions Mullen for growth over the remainder of 2022 and 2023.
  • Change in debt –77%
    • The 77% debt reduction minimizes the debt overhang problem and implies that equity holders can invest in a company positioned for growth and sound financial performance.
  • 281% increase in R&D spending
    • The company has increased its spending for R&D, which primarily relates to engineering costs for the Mullen FIVE and Mullen EV cargo van programs.

Mullen believes that technology, like all things, should be efficient, economical, and easy to operate. To this end, they are actively participating in accelerating new technologies that will help make the impossible possible and create competitively priced electric vehicles with exciting electric vehicle options for the American consumer with entirely U.S. based manufacturing and operations.

The number of positive catalysts that keep adding up makes the potential even more remarkable. These range from the Mullen Five and its cargo van orders to impressive battery test results and deals with OEMs (Original Equipment Manufacturers).

Most Electric Vehicle market experts are focused on Mullen's battery technology, arguably one of the company's most prominent potential catalysts, if not the biggest. On May 31, Mullen announced awe-inspiring solid-state polymer battery test results. The testing was conducted at BIC (Battery Innovation Center) in Indiana, a leading institution supported by renowned universities, government agencies, and commercial enterprises. In other words, we have a credible, world-class institution validating Mullen's technology. Notably, the results were also in line with the previous test results conducted at EV Grid. In other words, we have a double confirmation of Mullen's technology. The doubters argued that EV Grid was not the most credible institution to conduct the tests.

This resulted in David Michery, Mullen's CEO, wanting to reassure the investment community by conducting the tests at BIC. Let's call it a sanity check. Mission accomplished; Mullen passed through multiple intense testing sessions from accredited testing facilities. The test data collected from EV Grid and BIC have exceeded the expected test tolerance and show an impressive future for solid-state batteries. The President and CEO of BIC, Mr. Ben Wrightsman, stated:

"We are pleased to see that the results from ongoing testing are in-line with those previously notated...the cell thus far has performed as stated, and we will continue to test additional parameters to characterize the overall capabilities and performance."

Why is this critical to Mullen Automotive's (NASDAQ: MULN) success?

When scaled to the vehicle pack level, a 150-kilowatt-hour solid-state battery is expected to deliver more than 600 miles of range on a full charge. Most EV analysts believe that a 600-mile range is a charging goal that consumers will demand. It's well in line with conventional vehicles running on gas and diesel combustion engines. So, this game-changing news from Mullen, realized from the latest battery test results, implies greater mileage and a faster charging time, showing Mullen is well-positioned to become a notable player in both the energy and EV space.

What about the traditional lithium-ion cell batteries used by companies like Tesla?

Anyone following the lithium mining and resource story is well aware that it’s exorbitantly expensive and in short supply, with the added issue that China controls the market to a large extent.

One of the best alternatives to lithium batteries is solid-state batteries which offer benefits like higher energy density, faster charging time, smaller size, and safety compared to traditional lithium-ion cells (we have all seen the videos of lithium-ion cell batteries spontaneously catching fire seemingly for no reason). Mullen's use of solid-state batteries will make its cars lighter and capable of delivering higher ranges, allowing them to work in all kinds of climates and to leapfrog ahead of Tesla (Nasdaq: TSLA) on both the battery and safety front. Several spontaneous Tesla files have been reported in the news and featured on YouTube.

What about Mullen Automotive's (NASDAQ: MULN) other competitors?

Just 15 years ago, the idea of electric vehicles taking the place of the billions of combustion engine cars was the stuff of science fiction. Yet, even with the giant leaps in technologies, we are still at the beginning of developing technologies that will render the combustion engine obsolete thanks to solid-state batteries.

Mullen has a nice head start on solid-state battery technology compared to most of its competitors, and that's especially important for MULN to accelerate its efforts, thanks to the impressive battery test results discussed above. This increases the chances of MULN jumping from $.50 a share back to $16 a share – a very worthwhile speculative investment.

As mentioned above, range, charge, and safety risks are the biggest challenges of lithium-ion batteries. Solid-state battery technology is a technology that could resolve these issues and result in MULN selling tens of thousands of cars, trucks, and vans a month and eventually to the point where Mullen sells millions of cars a year.

Many of the big automotive firms are following Mullen's steps and already making moves to manufacturing EVs with solid-state battery experimentation. For example, Toyota is a leader in developing solid-state batteries and has many patents on the technology locked up already around the world.

But while Mullen is a tiny company, it has a good fighting chance in developing a solid-state battery that becomes the choice of millions of car owners. One thing is for certain solid-state battery technology is the next big thing, as evidenced by high-profile investors, including Mark Cuban of Shark Tank, who recently invested in the space.

While no one can deny that the competition to develop the most efficient battery for the automotive industry will grow more intense. Mullen has the balance sheet strength to progress its battery to the vehicle pack level after securing an additional $275M in funding following its annual stockholder meeting on July 26, 2022. In fact, Mr. Michery dropped big news during his recent Benzinga interview on August 4, 2022. The market has yet to digest the news fully.

Mr. Michery mentioned a big deal he is very confident about…

"We're talking to a ton of attorneys, accountants, auditors. If we accomplish this, which I believe we will, we will have an 8-K/Press Release that will come out in the very near future. And if this completes, this will be a first of its kind; we will tip the entire EV space on its head."

Mr. Michery hinted that the Mullen Energy facility in Monrovia would soon be in a position to produce 30,000 packs per year. This is huge because, in the same interview, Mr. Michery gave a brief update on the major Fortune 500 customer order regarding its electric cargo vans.

Michery reiterated that they have been working for more than one year on this deal, and the customer (telecommunications provider in the Southeastern part of the U.S.) has reported they are pleased with the performance. The customer requested certain van modifications in support of their anticipated use. The van was picked up by Mullen and modified to fit the specs requested by the customer, including an upgrade to an 80-kWh battery pack. The van is now in the final testing phase, and if everything goes well, there will be a vehicle purchase order. In other words, everything is on track. It is healthy for a business relationship to have some back-and-forth, especially before a sizeable deal is concluded.

The fact that the customer requested specific modifications shows there is serious intent. In addition, Mullen is planning to add some additional tech features to its vehicles and make some aesthetic improvements to have the most appealing vans out there, as Mr. Michery stated.

Also, in addition to the Fortune 500 order, Mullen signed a binding agreement with DelPack Logistics, an Amazon Delivery Services Partner, for up to 600 Class 2 EV cargo vans over the next 18 months (the first 300 vans can be delivered by November 30 at the request of the customer). Investors can expect more orders in the coming months. To this end, Mullen is on a hiring spree and ramping up production and is in the very early stages of possibly a monumental success story.

Talking about expansion, on August 1, 2022, Mullen announced the opening of a new Automotive Development Center (16,000-square-foot facility) in Irvine, California, located in the heart of Irvine's technology corridor and in close proximity to the Irvine Spectrum Center, in support of Mullen's expanding automotive team.

As Mullen continues to grow and expand its corporate footprint, various teams are being strategically split between the Mullen Monrovia and Irvine locations. Specifically, Battery, Powertrain, Thermal, and Infotainment teams will be located at the High-Voltage Facility in Monrovia, California, and the Irvine Automotive Development Center will be home to the Engineering Design and Development, Styling, Program Management, Marketing, and Finance teams.

In addition, on August 3, 2022, a new EV Technology team announced the opening, focusing on developing EV technologies for Mullen's portfolio of commercial vans. The team will be based in Detroit, and home to a new division of engineers and technology developers focused on Mullen's Class 1 – 5 commercial vehicle development. This "Detroit Tech Center" and its EV Technology team will play an important role in Mullen's goal of developing highly efficient EV technology that utilizes less energy consumption while offering greater vehicle ranges/power. The Detroit Tech Center will be the 5th location opened by Mullen. Mullen has already brought on close to 20 new hires and expects to have upwards of 50 employees by year-end. To summarize, at the time of writing, Mullen facilities include:

  1. Detroit Tech Center in Pontiac, Michigan
  2. Irvine Automotive Center, located in Irvine, California
  3. Advanced Manufacturing and Engineering Center based outside Tunica, Mississippi
  4. Mullen's High Voltage facility is located in Monrovia, California
  5. Mullen's Corporate Headquarters is based in Brea, California.

This demonstrates that Mullen is scaling up rapidly. According to the company's CEO, Mr. Michery:

"Detroit is a natural spot for us for all the right and obvious reasons. Most of our current partners are based in Detroit, so opening this center made perfect sense for our ongoing and future commercial van development... It is great timing for us as many of the other EV companies are reducing their teams, and we are growing at a rapid rate."

Mullen has huge international ambitions!

 

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A solid-state battery delivering more than 600 miles of range on a full charge is game-changing news. And this is precisely why Mullen has already commenced negotiations with several major OEMs. Mr. Michery is "talking to them at the CEO level," as they were impressed with the battery test results.