BREA, Calif. - Mullen Automotive, Inc. (NASDAQ: NASDAQ:MULN), an emerging electric vehicle (EV) manufacturer, has applied for Foreign Trade Zone (FTZ) status for its commercial vehicle manufacturing center in Tunica, Mississippi. The application, submitted on March 25, 2024, is pending a final decision expected within 30 to 90 days.
If granted FTZ status, Mullen would benefit from various customs advantages, such as the ability to defer, reduce, or eliminate duties on imported goods. This could lead to significant cash flow improvements, with the company estimating a potential deferment of $10 million in capital outlays for domestic sales during the remainder of fiscal year 2024. Additionally, international sales from the FTZ would be exempt from duties and taxes, potentially enhancing profitability.
David Michery, CEO and chairman of Mullen Automotive, emphasized the strategic importance of achieving FTZ status, stating it would "strengthen Mullen's supply chain management and deliver significant cash flow savings." He also highlighted the competitive edge it could provide for international distribution, as no duties or tariffs would be paid on sales outside the U.S.
Foreign-Trade Zones in the U.S. are designed to promote international trade and investment, offering companies the opportunity to engage in activities that might otherwise be cost-prohibitive due to customs duties. Benefits of operating within an FTZ include enhanced global competitiveness, increased logistics flexibility, and improved global supply chain performance.
Mullen Automotive, headquartered in Southern California, commenced commercial vehicle production in Tunica in August 2023. The company's EVs, including the Mullen ONE and Mullen THREE, have received IRS approval for federal tax credits and are certified by both the California Air Resource Board (CARB) and the Environmental Protection Agency (EPA).
The information in this article is based on a press release statement from Mullen Automotive.
InvestingPro Insights
Amid Mullen Automotive's strategic moves to enhance its operational efficiency through the application for Foreign Trade Zone status, the company's financial and market data provide additional context for investors. According to InvestingPro, Mullen Automotive holds a market capitalization of $34.07 million, signaling a relatively small player in the burgeoning EV industry. Despite the challenges faced, the company's management team has shown confidence in the firm's prospects by aggressively buying back shares, an InvestingPro Tip that suggests a belief in the company's value.
Another noteworthy InvestingPro Tip for Mullen is its liquidity position, where it holds more cash than debt on its balance sheet. This could be crucial for the company as it navigates the capital-intensive nature of the EV industry and seeks to capitalize on the benefits of a potential FTZ status. Additionally, the stock is trading at a low Price / Book multiple of 0.16, as of the last twelve months ending in Q1 2024. This metric may appeal to value-oriented investors who are looking for assets that could be undervalued relative to their book worth.
InvestingPro also highlights that Mullen's stock has experienced significant return over the last week, with a 14.29% price total return. This could indicate a recent uptick in investor interest or market reactions to the company's strategic initiatives. However, it's important to consider the broader performance context, as the stock has seen a price total return of -99.82% over the last year, underscoring the high-risk nature of investing in this sector.
For readers interested in a deeper dive into Mullen Automotive's financial health and market performance, InvestingPro offers additional tips that can be accessed at https://www.investing.com/pro/MULN. There are 19 additional InvestingPro Tips available, providing a comprehensive analysis of the company's position. To gain full access to these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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