Mullen Automotive (NASDAQ: MULN) made another deadline by delivering the first of its class-1 cargo vans. The vans were delivered to MGT Company in Highpoint, NC, by partner Randy Marion Automotive Group. The delivery is 4 class-1 vans with follow-on orders expected. MGT Company is a sales and leasing company focused on class 1-4 vans for commercial use. The company’s revenue was $70 million annually for the last 2 years and is expected to grow nearly 50% in 2023. The company’s vans are used primarily for last-mile services, delivery and trades such as plumbing and electrical.
The delivery is a win for Mullen, who has been focusing on under-served areas of the EV market. In the words of Thomas Gavlik, managing partner at MGT, “Mullen’s class 1 is a perfect entry point for us and working with the Company. The class 1 segment no longer has internal combustion engine options from the major OEM brands and certainly does not have any class 1 EV options. One of the biggest opportunities we see is the class 3 cab-chassis segment, with the potential to upfit and offer unlimited options for commercial customers,”
Mullen Automotive Strategy Is Validated
Mullen Automotive's strategy is to leverage existing technology to drive production and sales to get the core product off the ground. The FIVE SUV crossover is slated to begin production in 2024, and that will be supported (theoretically) by sales of the I-Go in Europe and Class 1- Class 4 EV cargo and delivery vans in the US. Assuming there are no technical issues with the first 4 vans, follow-on orders from MGT Company should follow soon, and this is not the only avenue for sales in the US. The company recently announced a pilot program at LAX that could result in orders for Mullen and Loop Global.
Additionally, Mullen has been selected by Rapid Response Defense Systems as a provider of Class-1 EV vans for the government. Because Mullen is the only manufacturer with a class-1 van in the line-up, it amounts to an exclusive deal that could lead to thousands of van sales annually.
“With the federal government’s strong interest in electrifying a growing portion of its vehicle fleet, Mullen’s commercial portfolio is very well positioned," said RRDS SVP – Federal Fred Bouman. “Mullen’s Class 1 EV cargo van launches this year and will be the only class 1 EV van in the market. It is 100% electrified, making it a strong fit for federal government business.”
Mullen Automotive Is Not Out Of The Woods
Mullen Automotive is not of the woods yet. Producing EV vehicles, including the Mullen GT and FIVE crossovers development, is capital intensive and Mullen’s capital position is shaky. The short sellers have closed some positions, but the bears remain in force. The latest read has short interest down to 8% from nearly 12% last month, but off-exchange short volume is still at 50%. The pop in share prices is nice to see but may result in another round of short selling that caps gains.
Shares of Mullen are up 30% in premarket trading and approaching resistance at the short-term 30-day moving average. This level is a likely point for short-sellers to reposition, so a move above here would be significant. If the market can get above this level, bears might start turning bullish and help drive this stock back up into the $0.30 to $0.40 range. It is too soon to know if this news is enough to get the stock back above the $1 NASDAQ threshold.