Wall Street hasn’t been kind to Brea-based Mullen Automotive Inc. (Nasdaq: MULN) over the course of 2022, but CEO David Michery isn’t surprised the market has “undervalued” his electric vehicle company.
“I think the retail community has been burnt so many times,” Michery told the Business Journal.
“Until they see fundamentals, they’re going to value us all bad,” he said of the fledgling EV market.
Take it from fellow Orange County upstart Rivian Automotive Inc. (Nasdaq: RIVN), Michery says. The Irvine-based EV maker, one of the most-watched auto companies in the country, saw a roughly 64% drop in its market cap since its IPO last November, from $77 billion to around $28 billion as of last week.
Mullen’s stock has been just as volatile as its more prominent local peer.
When the Brea-based EV maker went public via reverse merger with Net Element Inc. last November, its market cap approached $300 million at around $12 per share.
Since then, the company’s share price has been one of the nation’s most heavily traded stocks, averaging 62.5 million a day amid short selling, questions over the viability of the EV auto industry in general, and the overall weakness in tech stocks this year.
Michery remains optimistic.
“I think we’re better off than most of the guys that are out there,” he said. “We have the smallest market cap—these other guys are $2 billion and they don’t have anything.”
“We have everything.”
Among the things the company says it has, unlike some peers, is a strong balance sheet with over $60 million of cash on the books as of a month ago, debt of only about $11 million and the ability to secure another $275 million in financing, it said in late June.
It also has a growing base of commercial customers as it gets closer to the launch of its first consumer vehicle in a few years.
At press time, shares in Mullen were about 79 cents per share and a $400 million market cap.
There are currently no analysts covering the company.
While Ford Motor Co. (NYSE: F) and Rivian headline the Class 2 EV cargo space—light-duty commercial vans with a capacity of up to 10,000 pounds—Mullen says it is the first EV maker to build an electric Class 1 cargo van—another type of light duty commercial van with a capacity of up to 6,000 pounds—for last-mile deliveries. The uses for Class 1 and Class 2 vans are virtually the same.
Production for the company’s Class 1 vans has already started. Michery said he expects the company will sell 300 units of cargo vans by the end of this year, which totals to about $13 million in revenue. Next year, he anticipates the company will increase that number by fifteenfold, generating about $203 million in revenue with 5,000 Class 1 vans sold.
The electric cargo van segment is expected to be the fastest-growing market as there is a high demand from the e-commerce and logistics sectors, Mullen officials say. Urban last-mile delivery is expected to grow by 78% from 2020 to 2030, resulting in 36% more delivery vehicles, according to company officials.
The company last month inked a partnership with Amazon delivery service partner DelPack Logistics LLC, to provide up to 600 cargo vans over the next 18 months.
Despite not having entered the market yet, Mullen’s first retail vehicle, the Five crossover, has piqued the interest of consumers.
A 4,000-participant survey conducted by the company found that respondents preferred the Five’s design over that of the Tesla Inc. (Nasdaq: TSLA) Model Y and the Ford Mach-E, Mullen officials say.
“We found we absolutely hit the bullseye on the styling of the vehicle,” Mullen VP, Marketing Jason Putnam told the Business Journal. “That was a nice proof statement.”
The Five was one of the top five vehicles that made a lasting impression on guests at the LA Auto Show in November, according to post-consumer research by market data firm Forrester Research Inc.
Although the Five has a starting MSRP of $55,000, Michery says the price of the vehicle isn’t his chief concern.
“Elon Musk said, ‘I’m not going to worry about price, I’m going to make a sexy, high-performance vehicle,’” Michery said. “He charged a lot of money for it, and everybody bought it. They didn’t buy it originally because it was electric. They bought it because it was sexy, and it had performance.”
Michery assures the “100% American” Five will be the same.
The company expects the Five to begin production in 2024, with delivery starting in 2025.
The crossover is anticipated to deliver an electric range of up to 325 miles, with the ability to launch itself from 0 to 60 mph in 3.2 seconds. The vehicle can charge from 0% to 80% battery in 21 minutes.
Other cited features of the Five include a security and entertainment system, noise cancellation and driver assistance.
Customers can reserve a Mullen Five with a $100 deposit.
Following the Money
Michery’s role as Mullen’s CEO marks a return to his roots as an engineering major at the California Institute of Technology.
“When I heard the director there tell everybody that if you work really hard, in eight years, you can go make 120 grand a year, I got the hell out of there,” he said, who dropped out of the university after a year.
“I was not interested in working eight years to go get a job at JPL and make $120,000. I wanted to make money now.”
He then turned his attention to Hollywood for the “quick cash,” working for production and distribution companies that found ways to capitalize on flops.
One company he worked for reissued and internationally syndicated the then-canceled “Baywatch,” making it the “number one show worldwide.”
Michery eventually started his own entertainment company, American Music Corp. However, after growing “tired of doing the same old thing after a very long time,” about a decade ago he bought a company called Mullen Auto from Arthur Allen, a retired army officer.
Before Michery took the lead, Mullen made EVs. The company, founded in 2002, produced the first electric supercar on the market in 2007.
Forbes magazine named the company’s electric sportscar, the Mullen GT, the seventh fastest American production car in 2006.
Michery purchased Mullen in 2014. That same year, he acquired some of the assets of Los Angeles-based Coda Automotive Inc. after it went bankrupt.
“Coda spent three quarters of a billion dollars to come up with the cheapest electric car. They got exactly that,” he said of that company’s one vehicle, which was priced around $40,000.
Coda, founded in 2009, was the only other certified EV company other than Tesla selling EVs in the U.S., according to Mullen officials. Its electric sedan carried a range of 88 miles, “the longest among its class at the time.”
Coda’s economic efficiency, Mullen’s tech and “superior features” combined are what make the company Mullen is today, Michery said.
Once Mullen’s consumer vehicles go to market, the company plans to adopt a hybrid model for dealerships, deploying a direct-to-consumer system in some states and a traditional franchise model in others.
“In California, you can go direct-to-consumer and there’s not a lot of bureaucratic red tape you have to go through. But there are a lot of states where you might be able to sell with one or two stores, but you can’t service in the state,” Putnam said.
Mullen’s manufacturing, design and engineering operations span different areas in the U.S. The newest addition to its real estate portfolio is a lease for a nearly 16,000-square-foot engineering center at 100 Technology Drive in Irvine, which will be fully operational on August 1.
The company is also developing and scaling the technology for an advanced solid-state polymer battery from cell to vehicle pack. The test results from the Battery Innovation Center Inc. in Indiana for the solid-state polymer cell met and exceeded expectations, company officials say.
The company produces its own EV battery packs out of an R&D facility in Monrovia. Its battery packs will support its Class 1 cargo van, the Five and a forthcoming DragonFly sedan, expected to be certified by August 2024, filings indicate.
Mullen’s manufacturing center is in a 127,000-square-foot facility in Tunica, Miss. The company plans to eventually add another 1.2 million square feet of space to the facility.
The company currently counts under 110 employees; its Brea base runs about 25,000 square feet. After it is fully ramped up, officials expect a total headcount of up to 800, including its corporate, design, engineering and manufacturing centers.
“We have a lot of advanced processes [like] robotics. You have a lot of different things that don’t require you to have a kazillion people,” Michery said. “That’s very inefficient. We’re trying to learn from Tesla. They were very efficient.”
The company is currently hiring for managerial and engineering roles across the country.