In case you missed it, Mullen Automotive (NASDAQ:MULN) had some good news for investors last week. The California-headquartered electric vehicle start-up advised that it has obtained “Qualified Manufacturer” designation from the U.S. Internal Revenue Service. And as management explained, what this means in a nutshell is that just like when you go out and buy an electric vehicle from Tesla, Rivian, Ford, or other big-name manufacturers of electric vehicles, when you buy an EV from tiny Mullen Automotive, you can also get a “commercial EV federal tax credit of up to $7,500 per vehicle.”
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Which sounds like great news. And yet, since the press release came out, shares of Mullen Automotive are not up but rather down 20%.
So what’s up with that?
Reading between the lines
Mullen Automotive is already building or has plans to build a wide variety of EVs, including:
- Class 1 commercial Cargo Vans
- Class 3 commercial Cab Chassis Trucks
- Campus EV Cargo Vans
- Mullen FIVE and Bollinger B1 and B2 EVs
- Class 4 – 6 Commercial Vehicles,
- and even a “Mullen-GO” urban commercial delivery vehicle.
From this list, the company says that only two of these EVs, the Mullen ONE Class 1 EV Cargo Van and Mullen THREE Class 3 EV Cab Chassis Truck meet the IRS’s standards qualifying for “EV federal tax credits of up to $7,500 per qualified vehicle.” Other EVs from the list may (but also may not) eventually receive the green light from the IRS to receive federal EV tax credits of “$40,000” for “vehicles with gross vehicle weight ratings (GVWR) of over 14,000 pounds.”
Now, there are a couple-few issues with Mullen’s press release that are worth digging into here. First and foremost, the main claim that EV shoppers can get $7,500 cash back from the government for buying a Mullen EV. On the one hand, Mullen directs investors to an official IRS webpage describing the commercial clean vehicle credit program. And indeed, clicking through to that page, you will see confirmed that Mullen is now on the IRS’s “index of qualified manufacturers.”
It also appears to be a very recent introduction, having been shoe-horned into the middle of a list of 58 assorted automakers. On that list are a whole lot of names you’ve probably never heard of before. In addition to Tesla, Rivian, and Ford, Mullen Automotive is in there with a bunch of entire unknowns such as “Ecostream RV Industries,” “Odyne Systems,” and “Gillig, LLC.”
So apparently it’s not a very exclusive club.
It’s also worth pointing out that Mullen remains entirely absent from and unmentioned by the official FuelEconomy.gov webpage that clearly states whether EVs, purchased from various automakers, qualify for government tax credits of $3750 or $7500. If I were an EV shopper, that’s the one I’d be reviewing before making any decision to lay out tens of thousands of dollars on a new electric automobile.
Problem is, this list is a whole lot more exclusive. Tesla’s on the list. So are Rivian and Ford, and Volkswagen, Jeep, and Chevrolet besides — but Mullen isn’t. Until Mullen shows up on this list, too, I’d take the company’s claims that its vehicles will quality for the full $7,500 (much less $40,000!) rebate with a few grains of salt.
And considering the steep fall in Mullen’s share price, it looks like other investors are skeptical as well.
Overall, MULN has a Smart Score of 3 (out of 10) on TipRanks, meaning that it is likely to underperform the market. (See MULN stock analysis)
Smart Score is TipRanks’ proprietary quantitative stock scoring system that evaluates stocks on eight different market factors. The result is data-driven and does not involve any human intervention.
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