The share price of Mullen Automotive (NASDAQ: MULN) is gaining traction, and it may be on track for a reversal, but the market has given no signal to that effect. At this point, investors holding since 2022 have lost an effective 100% of their position, creating a significant overhang for the market compounded by a still-high 16% short interest. As it is, the share price in Mullen is in a downtrend driven by short-selling dwindling shareholder value despite its continued progress. 

Mullen is a first-mover in the EV space, focusing on class 1-5 vans and delivery trucks. The passenger EV market has fizzled, but the demand for commercial vehicles continues to be strong, specifically in the final-mile and short-haul arenas. The latest updates include IRS certification for the Bollinger B4, which qualifies it for thousands of dollars in federal and state EV tax credits to help it drive sales later this year. 

Mullen Automotive expands addressable market

The IRS approved Bollinger as a qualified manufacturer of EVs. The designation opens the door to up to $40,000 in credits for purchasers, and the B4 qualifies for the full amount. Mullen announced earlier in the year that it had secured batteries and assembly for the vehicles, which is expected to begin soon. Deliveries are forecast for the 2nd half. 

The California Air Resources Board, or CARB, has also qualified Mullen’s Class 1 and Class 3 vehicles. CARB qualification is a higher standard than the Federal regulations and is followed by fourteen states and the District of Columbia. Now, the Mullen Class 1 and Class 3 vehicles are currently available and can be sold in all 50 states, and sales are ramping up. 

Randy Marion Group is the company’s distributor of class 1 vehicles. The firm has been invoiced for 230 Mullen Campus vans for over $7 million, bringing the total invoiced by Mullen to over $17 million. That’s a tiny amount but is expected to grow significantly in 2024 as van production and deliveries increase. 

The addressable market for commercial vans is enormous. The global cargo vans market is estimated to be over $112 billion in 2023, growing at an 8% CAGR. Demand is driven by fleet expansion related to consumer demands, with more than 95% of the market ICE. As a first-mover in the arena, Mullen stands to gain a significant market share, although Rivian is also a solid player. It is ending the exclusivity clause with Amazon and will soon deliver its EV vans to the mass market. 

Mullen Automotive to report earnings; it won’t be enough to move the market

The next significant catalyst for Mullen Automotive is the Q4 release in late February. There are no estimates for results, but the company may surprise the market anyway. It will produce the first significant revenue and cash flow in years and may paint a favorable picture for the year. The critical details will be the company’s cash position and delivery outlook, which may not be sufficient to sustain operations without additional capital.

The 2023 annual report included significant language to the effect there are doubts about the company’s ability to continue as a going concern and that substantial additional funding will be required. Even if the company can sustain operations, it has accumulated a significant deficit of over $1.8 billion as of September 2023, which needs to be overcome to build shareholder value. 

The technical outlook: Mullen may be at the bottom, but it is a risky buy

The price action suggests Mullen is at a bottom, but this market has been at a bottom before and has fallen right through. Without a significant ramp in orders and production, cash will likely continue to burn and the stock price to wallow. If the company can produce increasing orders and deliver on them, and the vans are viewed as reliable, we may see Mullen's stock price increase.