Mullen Automotive (NASDAQ: MULN) stock surged 25% after the company announced the sale of 180 vehicles to Eco Auto, valued at $7.7 million. Deliveries are expected to begin next month and conclude over the next eighteen months. Those following, especially those invested in MULN, know of the tug-of-war for shares between the longs and shorts. Indeed, it causes turbulence. However, for those wanting low-priced exposure to the EV sector, MULN stock at current levels, especially on a pullback from the morning run, looks ripe for the taking.
Plenty of evidence supports that action, including the values noted by MULN in an investor update earlier this week. Factoring those intrinsics alone supports an appreciably higher share price. Face the facts—not many companies with a market cap of roughly $18.4 million* have a balance sheet holding assets projected to be worth $191.4 million in June. Nor do they have cash balances that exceed the entire market cap. Mullen checks both those boxes. (*data from Yahoo! Finance, 08/08/24, 10:25 AM EST)
While those two measurables can justify higher share prices, there's more to warrant their steepening trajectory, including something you'll rarely see in a sub-dollar stock—a $250 million financing commitment, which includes a $50 million upfront investment and an additional $150 million equity line of credit. Combine that with its cash on hand and solid balance sheet, and the Thursday morning spike may very well be the precursor to more significant gains.
Mullen Positioned To Capitalize On Commercial EV Sales
That's certainly not an overzealous expectation, considering that all assets are focused on achieving common goals- accelerating Mullen's growth initiatives, expanding its production capabilities, enhancing its market reach, and scaling its operations to efficiently meet the increasing demand for commercial Evs. The better news is that as they advance that mission, their asset base and cash position could mitigate downside risk and, perhaps more importantly, allow for strategic investments without the immediate pressure of searching for acquisition capital.
Speaking of potential acquisitions, consolidation of the miners may very well be in order, at least in some respects. Alliances and the sum of their parts would, at a minimum, provide additional ammo to cut into the share of sector behemoths like Tesla (NASDAQ: TSLA), General Motors (NYSE: GM), and Ford (NYSE; F). Remember, MULN stock isn't the only EV sector miner under pressure.
Polestar (NASDAQ: PSNY), NIO (NYSE: NIO), Rivian Automotive (NASDAQ: RIVN), and Stellantis (NASDAQ: STLA) are also well off their 52-week highs. And the thing is- despite EV sales slowing, they are far from stopping. In 2023, registered EV sales in China, Europe, and the United States neared 14 million, bringing their total number on the roads to 40 million, closely tracking the sales forecast from the IEA's(GEVO-2023), which had modeled a roughly a 35% increase, about 3.5 million vehicles, over 2022. While EV bears can point to the "slowdown," the bulls point to that number being about 6X higher than in 2018. Moreover, that report highlighted over 250,000 new registrations per week, contributing toward EVs accounting for about 18% of all cars sold in 2023, up 14% from 2022.
But there's even better news for investors searching for value and low-priced entry into the EV sector. A report by Utility Dive indicates that the global share of EVs on the road could reach 86% by 2030, with China potentially leading that charge with an EV market share of at least 90%, according to an RMI report in September. Combining forces makes sense at some point, especially as the sales and market penetration gap between the majors and minors widens.
Mullen Is Leveraging Competitive Strengths
MULN would undoubtedly be an attractive mate. Remember, Mullen has already checked the boxes for regulatory compliance and industry certification, successfully meeting all federal and state regulatory requirements for Class 1 and Class 3 commercial vehicles. This achievement separates MULN in a competitive landscape by facilitating expedited market entry and qualifying them for state-level incentives that enhance vehicle affordability and drive sales. They even pass the most stringent requirements in California, with the Class 1 EV cargo van and Class 3 EV cab chassis truck earning certification from both the California Air Resources Board (CARB) and the Environmental Protection Agency (EPA).
These certifications, coupled with the likely continuation of federal EV tax credits and California's HVIP voucher program, make Mullen's vehicles more than attractive to buyers; they provide the company with a competitive edge. Keep in mind that MULN is more than just ambitious in meeting demand; it's actively manufacturing and selling commercial Class 1 and Class 3 EVs from production facilities in Tunica, Mississippi, and Mishawaka, Indiana.
That's allowed MULN to continue scaling. The company's distribution network recently added six new dealerships and five new commercial dealer partners, which broaden its market reach, improve customer accessibility, and should enhance the pace of market penetration by making its vehicles available to a broader range of customers. Subsidiary contributions are also contributing to growth.
Bollinger Motors, Better Batteries, And bizEV
Bollinger Motors, a subsidiary of Mullen, announced securing agreements to sell 200 B4 Class 4 EV trucks. Consider that a likely starting point. Mullen has said it is actively engaged with various sector clients, including telecoms, fleet providers, and municipalities, to diversify its customer base and prove, through strategic partnerships, its ability to serve diverse market needs—not exclusively through vehicle sales, either.
Mullen is also committed to developing solid-state polymer battery packs and is progressing through testing with lead suppliers. Full certification is expected by the second half of 2025. Keep in mind that milestones reached pointing to success in that mission can be appreciable value drivers. Thus, while a 2025 certification target date sounds far off, value would likely accrue on positive updates. That program alone could be transformative to MULN, considering the need for advanced battery technology that offers superior performance and safety compared to traditional lithium-ion batteries.
Also worthy of attention from an appraisal perspective is the value inherent to Mullen's announcement last week. The company said it launched a new lease program for its Mullen ONE, Class 1 EV cargo van. The program, called bizEV, targets qualified buyers, including individuals, small businesses, and fleets, and is available through Mullen authorized dealers. Consumer-friendly terms of the bizEV lease program include a 3-year lease starting at $475 per month plus applicable taxes and fees, including scheduled vehicle maintenance. The most significant incentive is that by design, the program makes EV ownership more accessible and affordable, especially for small businesses, by removing the traditional upfront costs and providing flexible lease options. Cost value isn't the only consumer benefit.
They also get an EV tailored for urban last-mile delivery. The class 1 commercial Mullen ONE EV is designed to navigate narrow streets and maximize cargo space and is a first-of-its-kind in the U.S. market, compliant with U.S. Federal Motor Vehicle Safety Standards, EPA, and CARB clean air emissions standards. Like others in the MULN portfolio, this vehicle is doing more than making commercial EV ownership seamless and affordable. It exemplifies a sustainability commitment that aligns with broader environmental goals and initiatives. That's important.
It's now an exposed secret that companies that contribute to reducing carbon emissions and promoting cleaner transportation solutions are the likeliest beneficiaries of global consumer interest. In that respect, Mullen meets that high standard with an attractive product lineup with superior performance that serves several niche markets.
A Value Proposition Exposed
Those already following Mullen Automotive are aware of the strengths mentioned. They may even be capitalizing on basement-level prices to cost-average holdings. But not everyone has heard of Mullen, its niche focus strategy, and its strengthening fundamentals, which combine to expose a compelling value investment proposition. To those, take a look at this EV company and the opportunities it presents
Mullen Automotive has excellent products, a healthy portfolio of certifications, an expanding distribution network, a solid cash position, and a $250 million financing in place. All that for roughly $0.74 on Thursday does look attractive. In fact, that price shows that Mullen may be one of the most misunderstood companies in the EV sector. However, that's not necessarily bad news. As history has demonstrated, good news in the EV space can powerfully impact a share price. Trading in anticipation of Mullen's expected wins may, therefore, be a wise and timely consideration.
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