TUNICA, MS - Mullen Automotive, Inc. (NASDAQ: NASDAQ:MULN), an emerging electric vehicle (EV) manufacturer, has achieved Foreign Trade Zone (FTZ) status for its commercial vehicle manufacturing and assembly center in Tunica, Mississippi, according to a recent announcement. This federal approval is expected to provide the company with up to $21 million in deferred import duty payments over the fiscal years 2024 and 2025.
The FTZ designation allows Mullen to defer duty payments on imported goods until their sale within the United States, enhancing cash flow management. Additionally, for international sales, Mullen's vehicles exported from the zone will be completely exempt from duties and taxes.
This could result in a significant cost advantage, with the company projecting a bottom-line improvement of up to 20% on the full duty cost for its Class 1 EV cargo vans and Class 3 EV trucks.
David Michery, CEO and chairman of Mullen Automotive, emphasized the milestone's importance, noting the competitive edge and cash flow benefits it brings. He also highlighted the positive implications for the economic development of Tunica, Mississippi.
The company began commercial vehicle production in Tunica in August 2023 and has since secured federal EV tax credits for its commercial vehicles. Mullen's EVs, including the Mullen ONE and Mullen THREE, have received certification from both the California Air Resource Board (CARB) and the Environmental Protection Agency (EPA), and are currently available for sale in the U.S.
The FTZ program, established by Congress in 1934, offers companies operating within these zones the ability to reduce, defer, or eliminate customs duties, enhancing their competitiveness in global markets.
The information in this article is based on a press release statement from Mullen Automotive.
InvestingPro Insights
As Mullen Automotive (NASDAQ: MULN) secures a strategic advantage with its newly granted Foreign Trade Zone status, it's worth noting that the company's financial metrics reflect a complex picture. According to InvestingPro data, Mullen Automotive has a market capitalization of $44.75 million and is trading at a low Price / Book multiple of 0.21 as of the last twelve months leading up to Q1 2024. This could indicate that the company's stock is potentially undervalued relative to its book value.
Meanwhile, the InvestingPro Tips highlight that Mullen Automotive is trading with high price volatility, which may appeal to certain investors looking for short-term gains. The company has also experienced a significant return over the last week, with a 1 Week Price Total Return of 47.52%. This recent performance could catch the eye of momentum investors, though the long-term view shows that the price has fallen significantly over the last year, with a 1 Year Price Total Return of -99.47%.
Investors interested in further insights should note that there are additional InvestingPro Tips available, which could help them make more informed decisions. For example, Mullen Automotive is noted for holding more cash than debt on its balance sheet, which may provide some financial stability. However, the company also quickly burns through cash, a critical factor to consider for long-term viability. For those looking to explore these nuances, InvestingPro offers a comprehensive list of tips, and using the coupon code PRONEWS24 can get you an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Looking ahead, investors will be keenly awaiting the next earnings date on May 15, 2024, to gauge the company's financial health and progress towards profitability. With the InvestingPro Fair Value estimated at $3.7 USD, there appears to be room for discussion on the company's valuation and future prospects in the competitive EV industry.
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