Mullen Automotive (NASDAQ: MULN) stock has been electrified, surging over 177% since last week*. But they didn't stop there; yesterday, a bullish tailwind pushed shares to even higher levels. And with short sellers now scrambling to cover a hot trade just days ago, the path of least resistance appears to be to the appreciable upside. In fact, after acquiring exclusive sales, distribution, and branding rights to one of the most promising urban ladt mile delivery vehicles, the surge in MULN shares (pun intended) may be the starting point for one of the most compelling value investments in the EV sector. (*percentage gain of 177% from 10/18/22 to intraday 10/25/22 price of $0.61, Yahoo! Finance)
That's no exaggeration. Yesterday, MULN announced being in the driver's seat to exclusively market, among other things, the I-GO, a compact urban last-mile delivery electric vehicle. More importantly, from a near-term revenue-generating perspective, the I-GO is fully EU Standard-approved and certified for sale in select European markets. That means the value proposition for MULN, which many already saw as attractive, can more appropriately be described as compelling.
Video Link: https://www.youtube.com/embed/zHWJfzvX3uM
So, What Happened?
So, what happened? Simply put, MULN closed a deal acquiring what could be a game-changing asset for the company. But keep this in mind before reading on. Acquiring exclusive sales and marketing rights to sell the I-GO in particular European markets isn't the only near-term value driver for MULN. Instead, it adds to an impressive product portfolio, including its Mullen FIVE EV line, the RS, and a developing line of innovative EV battery solutions. More on those later. For now, the I-GO is the star of the show.
And it's earning its attention by being considered a "perfect" electric vehicle for urban European markets, filling a massive niche opportunity by bridging the gap between the demand for quick deliveries and space constraints found throughout European cities. Targeting a last-mile delivery fleet and in-town consumer market opportunities, the I-GO could be the ideal vehicle to meet different local needs.
Frankly, with its short but powerful 96-inch wheelbase, 16.5-kWh battery pack, rear-wheel drive, and a curb weight of only 1,753 lbs, it already does. Add with its NEDC estimated range of 124 miles per charge and its ability to easily handle the stop/go and weave in/out typical of narrow European urban streets, it's already emerging as the favored vehicle choice for both last-mile delivery companies and consumers wanting convenience and value.
Building And Marketing A Better Last Mile EV
In fact, the I-GO was built to meet multiple market needs, designed to get to the customer's door faster, and provide affordable in-town EV options, while decreasing pollution and congestion levels across Europe. It's attractively priced, too. The I-GO will have a starting price of only $11,999 plus taxes and fees and will be retailed and serviced through supporting local European distributors. Investors in MULN should love the deal, and short sellers not so much. But even they may be willing to admit that the acquisition is a significant win for MULN, causing them to cover positions.
They probably should. The transaction provides MULN with massive new revenue-generating opportunities. It also promotes and extends its brand into other countries while simultaneously allowing them to remain focused on its mission of manufacturing its lineup of equally impressive EVs in the USA.
Those include MULN's current commercial vehicle lineup comprised of Class 1 and 2 EV cargo vans, Class 3 through Class 6 vehicles resulting from its majority acquisition of Bollinger Motors, and its Mullen FIVE series. Incidentally, in addition to securing the exclusive sales, distribution, and branding rights for the I-GO in Spain, France, Germany, the UK, and Ireland, MULN said it also entered into an Asset Purchase Agreement to acquire all assets of Electric Last Mile Solutions, Inc. and Electric Last Mile, Inc. ("ELMS") from the ELMS Bankruptcy Estates. That part of the deal can considerably extend MULN's marketing and sales reach.
Thus, while some tug-of-war gamesmanship by long and short-side traders may add some volatility in trading, the case against MULN being better positioned than ever for near-term growth is considerably weakened. And that should help raise the ceiling on price trajectory.
Now Focused On Near And Long-Term Potential
That presumption is warranted. Overnight, MULN went from a medium to long-term play to a near-term and compelling value proposition. And despite its 177% spike, MULN shares still look disconnected from an appropriate valuation. But that's not altogether bad news; that disconnect exposes opportunity.
And not just from a products standpoint. While MULN is well-fortified with a best-in-class product lineup, it's also steered by an executive management team with extensive EV, OEM, and startup experience. They combine to leverage nearly two decades of EV experience and are fluent in battery modeling, algorithm development, and robust engineering in battery management systems (BMS) development. With the commercial fleet vehicle demand soaring, better battery solutions needed, and last-mile delivery EV service needs expected to grow by 78% by this decade's end, having that asset as part of a broader infrastructure matter.
It's paying dividends already. MULN can be quick to market, enjoys lower capital investment than other EV startups, and leverages US-based manufacturing and operations, allowing them to create, manufacture, and deliver competitively priced products to market.
Being Better Is Part Of The Intention
They have an excellent start; creating an end-to-end ecosystem could make "going electric" more accessible than ever. And considering that millions of private and public-sector consumers want the types of products Mullen sells and plans to sell, and now with an overseas presence, MULN and its shares could shift into hypergrowth. Actually, both already are.
On the products side, its Mullen FIVE EV is attracting significant attention. It's a "strikingly different" addition to the premium midsized electric-powered sport utility vehicle market that is more than stunningly designed and engineered; it's manufactured entirely in the USA. But that's only part of its appeal. Its timeless design and intuitive functionality also showcase power, going from zero to sixty in 3.2 seconds, positioning it at or near the top of many categories compared to competing vehicles' styles and performance. But there's more to like. It's also equipped with modern advancements like facial recognition technology, an integrated LED lighting system, voice command, and PERSONA, a personal vehicle assistant controlled via app managing preferences and security modes.
That's led to consumer opinions overwhelmingly supportive of the car, placing it among the best in the space and earning competitive respect against Ford's Mach E (NYSE: F), General Motors (NYSE: GM) EVs, the Toyota (NYSE: TM) bZ4X and the Tesla Model Y (NASDAQ: TSLA). Those wanting to see it in action won't wait long. The first fully functional demonstrator vehicles of the Mullen FIVE EV Crossover will begin arriving this October, and that's just one vehicle launch in the queue.
Beyond FIVE's market intro, MULN plans to bring its Mullen RS to market in Spring 2023, as well as a lineup of commercial fleet vehicles intending to seize a substantial share of the demand for last-mile delivery vehicles. And part of that market, and others, can be exploited through MULN's controlling interest in Bollinger Motors. That interest positions them ideally to capture share in several markets as one of the few offering electric chassis cabs and platforms in several vehicle classes, and immediately moves MULN into the medium-duty truck classes 3-6, along with the B1 and B2 sport utility trucks. Off-road videos of the Bollinger are impressive as well. So, don't think the leisure market isn't in play. It is.
But Mullen isn't only a vehicle manufacturing company; they are a technology company, too, working intensively on developing innovative polymer solid-state battery cell technology.
Better Battery Technology, Partnerships In-Play
Advancing through its prototype stage, MULN believes it is on the verge of finalizing an industry-best design to improve electric battery safety and capability by replacing the liquid electrolyte currently used in lithium-ion EV batteries. Trials intend to show that swapping the liquid for a solid-state alternative will significantly improve performance, power, and safety.
Remember that this current multi-billion dollar battery market opportunity is expected to become a trillion-dollar one as early as 2030. As is often the case, best-in-class products earn the lion's share of market rewards, and Mullen could become one of the lions. The company recently emphasized how its rendition of solid-state batteries offered higher energy density, faster charging time, smaller size, and safety compared to traditional lithium-ion cells.
Accretive partnerships matter too, and MULN has them. Mullen is engaged with Hofer Powertrain and DSA to facilitate the manufacturing of components for its electric drive systems and remote OTA capabilities. The company is also working with and supported by ARRK, which provides computer-aided engineering, body in white, battery, closures, interior, chassis, thermal, and infotainment engineering for its EV lineup.
They also joined forces with automation company Comau in a strategic alliance to develop a state-of-the-art body shop. They are also working with Dürr, supporting assembly and paint shop technologies. They connect seamlessly with Mullen's fully equipped engineering facility in Tunica, Mississippi, which serves as the company's Advanced Manufacturing Engineering Center and Proving Grounds for manufacturing and engineering efforts. Tapping into the experience of both, near-term expansions at the facility include integrating general assembly and test track infrastructure.
That's not all. More value can accrue from MULN's desire to acquire an additional factory for Mullen FIVE production and various new programs, which, if consummated, could expedite the entirety of the MULN value proposition. Even after the recent spike, the accretive value from all the above appears to be entirely absent from its valuation.
Bullish Momentum Merited
But that can change quickly, and from the looks of trading, it's already starting to. And not because MULN stock is part of a momo play but because they are executing a growth plan that is beginning to develop and bear financial fruit faster than many expected. Its acquisition and plans to exploit massive potential from its I-GO lineup could further fuel the speed of that growth.
Thus, considering that the sum of MULN's parts just got appreciably stronger with its last mile vehicle acquisition and knowing that MULN's mission is on track and gaining revenue-generating momentum, the value proposition may be too good to ignore.
Most important, though, is that MULN's mission of creating sustainable value is far from over. And recent transactions reinforce the fact that size doesn't always matter. Small companies can get and often do get bigger faster; MULN proved that point. The better news- with momentum at its back, it's a trend likely to continue.
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