Mullen Automotive: MULN touts plan to focus on commercial EVs, save $170 million
- Mullen Automotive says it will endeavor to save $170 million over next year.
- MULN stock rises 2% in Monday market on new cost-saving strategy.
- Mullen stock is down 70% already this year.
- EV company aims to sell 100 commercial units in April.
Mullen Automotive (MULN) stock gained 2% on Monday afternoon as the California-based electric vehicle (EV) manufacturer debuted a new cost-saving strategy to streamline its operations. CEO David Michery and other officials expect that the new plan will reduce costs by $170 million over the next year as Mullen focuses on optimizing its commercial vehicle segment.
Mullen rose 2% to $4.08 at the time of writing late in the New York session, but was up more than 6% earlier in the session. The S&P 500, Dow Jones and NASDAQ witnessed slight gains around one or two tenths of a percent. US Treasury yields rose by more than 1% in the part of the curve ranging from the 2-year to 10-year tenures.
Mullen stock news
Mullen’s eagle-eyed focus on revving up sales from its commercial segment are being pushed into hyperdrive. CEO Michery enumerated three parts of the strategy:
- Prioritizing near-term revenue and reducing non-commercial initiatives
- Consolidating the Troy and Irvine engineering offices
- Expanding national commercial dealer network
“Momentum is increasing and we have transactions with fleets of varying sizes and vocations,” said Brad Sigmon, vice president of Randy Marion Automotive Fleet Operations, Mullen’s commercial dealership partner. “Building on March transactions, our April goal is to move 100 units of Mullen Commercial EVs.”
By consolidating certain initiatives and ceasing certain non-core parts of the business, Mullen hopes to save $170 million in operating expenses in the coming four quarters. That figure does not take into account the most recent two quarters ending in December and March. Instead, it involves savings of $170 million when compared to the 12 months ending on September 30, 2023.
More specifically, Mullen’s statement reads: “Reductions in operating cash flows are estimated to be approximately $69 million and investment spending is estimated to contract by $101 million over the next 12 months when compared to the Company’s spend over the last fiscal year.”
The trimming of the fat comes at a significant crossroads for the company, which may need to raise further funding this year in order to meet its production goals. CEO Michery has at least intimated to shareholders that he wants to halt dilution of MULN stock in 2024, instead focusing on raising debt.
The company is focused on sales of its Mullen ONE delivery van, Mullen CAMPUS and Mullen THREE cab chassis.
EV stocks FAQs
Electric vehicles or EVs are automobiles that use rechargable batteries and electric motors to accelerate rather than internal combustion engines (ICEs). They have been around for more that 100 years, but battery technology research & development was meager for much of the 20th century. Lithium-ion battery technology became advanced enough to produce EVs at scale in the late 1990s and 2000s, and sales have been steadily increasing since then Tesla’s Roadster was unveiled in 2008. EVs are viewed as a means of reducing carbon emissions since battery electric vehicles (BEVs) themselves produce zero emissions. Other vehicles called plug-in hybrid electric vehicles (PHEVs) utilize both battery electric power and ICEs as a backup.
EVs are growing from a small base, but they rose from 9% of global new auto sales in 2021 to 14% of the total in 2022. This was a 65% YoY growth rate, and the industry delivered 10.2 million EVs worldwide in 2022. Projections show this number climbing above 16 million in 2023. Across the world, market shares differ greatly among nations. Nearly 88% of Norwegian new car sales in 2022 were EVs. On the other hand, the United States, where much of the modern innovation in EVs was forged, had less than 8% of new vehicle sales go to EVs in 2022. The largest EV market in the world, China, saw 30% of the market go to EVs that year.
We know you’re thinking Elon Musk, but he’s probably more like the father of the mass-market, contemporary EV. All the way back in 1827, a Hungarian priest named Anyos Jedlik invented the electric motor and used it the following year to power a vehicle of sorts. French scientist Gaston Planté invented the lead-acid battery in 1859, and German engineer Andreas Flocken built the first true electric car for the public in 1888. EVs made up about 38% of all vehicles sold in the US around 1900. They began losing market share rapidly after 1910 when gasoline-powered vehicles grew much more affordable. They largely died off until new research programs in the 1990s led to gradual private sector investment in the 2000s.
China’s BYD is by far the largest manufacturer of EVs in the world. In 2022 it sold 1.8 million EVs and in the second half of the year made up 20% of the global market. The asterisk given to BYD is that the vast majority of these vehicles are hybrids. Tesla’s 12% market share is often treated as more significant than BYD, because it only sells BEVs and is the most famous EV brand in the world. Volkswagen, BMW and Wuling then round out the top five. As a new sector with heavy investment though, many startups have flooded the market. These include China’s Nio, Li Auto and Xpeng; a Swedish-Chinese manufacturer called Polestar; and Lucid and Rivian from the US.
Mullen stock forecast
Mullen stock is down 70% year to date and 99% over the past year. Following its most recent reverse stock split last December, MULN has continued to crash as prior warrants were cashed in for common stock, putting downward pressure on the share price.
There is no reason to believe that Monday’s gains will survive. The one constant in MULN’s history is its downtrend. This is the type of stock that should never be held long term. Opportunistic bulls might enter the fray, however, if MULN stock can overtake the 21-day Simple Moving Average (SMA) near $5. Further resistance sits at $6.36 and $6.95.
MULN daily stock chart