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Relentless EV Startup Mullen Wants to Succeed Where Many Others Have Failed

Newsweek 11/29/2022 Jake Lingeman
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The global automotive landscape is littered with the carcasses of electric vehicle (EV) startups and wannabes. Ten years ago, Faraday Future, the original incarnation of the Fisker brand, and even vacuum maker Dyson were trying to get in on the Wild West-style action of the EV gold rush. In 2022 the names look more familiar: Ford, General Motors (GM), Volkswagen and Tesla.

CODA Automotive, founded in 2009, is one of those brand carcasses. Early on, it was one of the two automakers selling EVs in the United States alongside Tesla. CODA produced about 1,000 electrics before going bankrupt.

In 2014, it was acquired by Mullen Automotive (NASDAQ: MULN) with David Michery, an investor, car guy and entertainment industry veteran at the helm. Michery thinks he and Mullen can succeed where those other companies faltered.

The CEO found his love of cars like many people. It started with Hot Wheels cars, progressed to his first vehicle that he needed to fix up, and then lined up with his interest in math and science. But he doesn't always need to drive them.

"Some people buy art, and they hang it on their walls. Cars to me are like artwork, it's about bridging the gap between beauty and power. So when I got an opportunity to build the Mullen Five I was excited. Before, I was always getting somebody else's product and had to do the best I could with it. This was the first time where I could command the entire program from beginning to end," Michery said.

Analysts are mixed on Mullen's chances of succeeding, though Michery is not.

"When I talk to friends, I'll joke that anybody with some crayons and some paper can draw a car and go out and get backing. But we've been around here for over a decade. A startup is one thing, understanding what it takes to be an original equipment manufacturer (OEM) is a whole different game," Michery told Newsweek.

"And that's where I think a lot of these guys get lost. They don't have the knowledge or the expertise. We had been very fortunate because we were able to learn as we progressed," he said.

CODA only sold about 1,000 EVs before folding. Mullen USA © Mullen USA CODA only sold about 1,000 EVs before folding. Mullen USA

Michery bought Mullen Motor Cars in 2011, an EV company that was founded in 2002 and produced one of the first electric supercars in 2007 called the Mullen GT. Michery then founded Mullen Technologies and Mullen Wholesale Operations under the Mullen brand.

The Mullen GT was too costly to build, around $80,000 says Michery, and would have to sell for around $125,000, so he ended production.

Mullen then acquired CODA Automotive in 2014, which went bankrupt years earlier. It bought CODA Energy Facilities and changed the name to Mullen Energy in 2018. It then bought the rest of CODA's assets including the faculty in Monrovia, California, where Mullen's high voltage battery R&D facility is now located.

CODA developed and assembled lithium-iron phosphate battery systems for cars and energy storage, traditionally more stable and longer-lasting than lithium-ion batteries. That was what Michery wanted.

The Mullen Five will go on sale in 2024. Mullen USA © Mullen USA The Mullen Five will go on sale in 2024. Mullen USA

"What I was after with CODA was the technology that it had developed a decade earlier. They were pioneers in battery technology. That's the fundamental core of their business," Michery said. "We continued to accumulate these assets and then we reintroduced the CODA sedan at the LA Auto Show 2014."

"You know, people came out and said look, they tried to bring the dead back to life. They put 'lipstick on a pig.' But we did garner experience. We learned how to sell a car. We learned how to service the car because we did, and most importantly, we had an airbag recall and we were able to deal with that," Michery said.

Mullen now acts as a mini original equipment manufacturer (OEM), still servicing the few CODAs on the road today, though the brand is completely dead.

Michery expanded the Mullen brand from 2014 to 2018, buying some companies, partnering with others, using money earned in the music and television industry. After working with artists like DMX and Bone Thugs 'n Harmony, he joined All American Television in the 1980s when it acquired the syndication rights for Baywatch.

CEO David Michery in front of the Mullen Five. Mullen USA © Mullen USA CEO David Michery in front of the Mullen Five. Mullen USA

The company also acquired 50 percent of Mark Goodson Productions, producers of The Price is Right and Family Feud, and was eventually sold, with Michery taking a piece of the profit. He started and sold a few more multimillion dollar companies, bringing him back to his love of cars and the industry.

In 2018 Mullen partnered with Chinese car company Qiantu Motors to assemble Qiantu's Dragonfly K50 sports car in the U.S. It had a 4.7-second zero-to-sixty time and a 236-mile range. For reference, the Tesla Model 3 had a 260-mile range and a 4.5-second sprint at that time. The company only sold a few hundred, folded during the COVID-19 pandemic and was delisted from the Chinese stock market.

Mullen brought a lawsuit against Qiantu in a U.S. federal district court in California and has since made an offer to buy the Dragonfly IP so the car can be built here in Mississippi under ownership through a joint venture. Mullen says that it has proposed a 70-30 ownership structure where it would be the controlling entity, but notes that negotiations are fluid and ongoing. In June Qiantu was trying to make a comeback with another sporty EV.

Mullen didn't develop the old vehicle but if it completes the deal, Michery says it will design the new Dragonfly to be like the Mullen Five RS with a "200-mph top speed and a zero-to-sixty sprint time of 1.95 seconds".

The Tunica factory was going to be the first home of the Five, but now it has moved to Indiana. Mullen USA © Mullen USA The Tunica factory was going to be the first home of the Five, but now it has moved to Indiana. Mullen USA

To build the Five and any future vehicles, Mullen is currently building a second factory in Tunica, Mississippi to go along with the CODA property it owns in California.

"Monrovia is a city block long. We acquired it in 2018. It took us four years. And when you walk around in there, there's still some CODA banners and stuff like that in the laboratories. We had VIP battery innovation centers down there a month ago working with us on scaling to the pack level. We're going to produce packs at that facility like that it has in the past," Michery said.

The process is getting finalized in Monrovia, and it will be duplicated in Mississippi, right around 2026 when the company says its solid-state battery packs should also land. Michery is confident.

"We validated our tests with several companies. We went initially and took our solid-state polymer battery and we had it tested by EV Grid. Then we talked to another institutional facility that works with universities and the government to further corroborate the results," said Michery.

"Now we're scaling from the cell level to the vehicle pack level. There's still testing and all the other requirements. That's why we think in a couple of years by 2026 we'll be able to have a certified solid-state pack that we can put in a vehicle. It will be a game changer."

Mullen's factory in Mississippi isn't manufacturing yet. Mullen USA © Mullen USA Mullen's factory in Mississippi isn't manufacturing yet. Mullen USA

In April, short seller investment firm Hindenburg Research did a deep dive on Mullen, reporting that things are not as they seem, that the company is another under-delivering EV startup. The report says that Mullen's claims on solid state batteries, that they would be in production by 2026, are not legitimate, that it has faked some of its future potential revenue and that its new Mississippi plant is nowhere close to being ready for production.

Mullen says that there are several inaccuracies in the report and noted that Hindenburg itself was under investigation by the U.S. Department of Justice as reported by Bloomberg. Newsweek contacted the DOJ in relation to the story. They would neither confirm nor deny the investigation.

Tom Gage, a scientist and Chief Executive Officer of EV Grid, a company that specializes in testing EV batteries, said that he was misquoted in the Hindenburg Report and that Mullen did not misrepresent its test results. On the Risk On podcast Gage said that his company did test the battery, which came out to 343 miles of range.

Hindenburg told Newsweek it stands by its report.

A look inside the factory in Tunica. Mullen USA © Mullen USA A look inside the factory in Tunica. Mullen USA

As for the solid state batteries, Michery says the company has been working round the clock to scale the tech to the vehicle pack level, and that it has a joint venture agreement in place with LGG Advisors. The company reiterated that it expects the new battery packs to debut in the second generation of vehicles.

Michery says because Mullen is a public company, and the factory details haven't been shared with investors, it can't share them now. The report says that Mullen still needs to complete its Environmental Protection Agency (EPA) certificate for the vehicle, which takes 12-18 months. The EPA doesn't comment on current certification processes, it told Newsweek, but that is about how long the process takes. As with the factory, Mullen decided not to comment as those details have also not been disclosed to the public.

The Mullen Five is a compact sport utility vehicle that brings together everything Mullen has learned over the past 20 years in high-voltage technology from CODA manufacturing, how to hire the best engineering talent and how to put those resources together. The Five's design influences include the California natural landscape and the state's urban areas.

Mullen says the Five has an estimated range of 325 miles with a 155 mile per hour (mph) maximum speed. The zero-to-sixty mph sprint takes a supercar-like 3.5 seconds and its battery pack is rated at 95 kilowatt-hours (kWh).

Mullen is currently taking the Five on the Strikingly Different tour in the US. Mullen is currently taking the Five on the Strikingly Different tour in the US.

The Five can recharge from zero to 80 percent (about 260 miles) in just 21 minutes. It also comes with an SAE Level 2 advanced driver assist system. Mullen calls it a Level 2.5, meaning it should be able to operate hands free as long as the driver's eyes are on the road like Cadillac's Super Cruise. The rear two seats offer tray tables and a touchscreen infotainment system will feature voice control.

Mullen has a full team of executives and engineers, recently adding former GM executive John Schwegman as Chief Commercial Officer for its next phase in commercial vehicles. Michery recounted the courting of one executive, telling the story about how Tesla CEO Elon Musk went after John Taylor first.

"I'll talk about the one that took me five years to get: John Taylor. Elon went to Detroit and he pulled John out of GM. John had been there for 40 years and Elon said 'hey, you know I want to start this company called Tesla, I want you to come with me.' So John Taylor was one of the first 50 guys at Tesla. And he built the architecture for Fremont and the architecture for the Model S," said Michery.

"Taylor said to me, 'look if I would have known what I was getting into when I signed up with you, I would have stayed retired.' He says 'you're a five to midnight guy.' It's true, I'm up at 5 a.m. Pacific because I'm dealing with people across the world and then I'm up at midnight, finalizing things. And that's my normal routine."

The rear of the Five crossover will feature flip-down tables for work and leisure. The rear of the Five crossover will feature flip-down tables for work and leisure.

Newsweek reached out to Tesla to find out Taylor's involvement on the Model S but did not receive an answer by the deadline.

"We're excited. The automotive corridor goes all the way from Detroit down into the south, right into Mississippi. We have our guys in Troy, Michigan and Tunica. We have our engineering center here in Monrovia. We completely closed the circle. We're not going to have supply chain issues, because we source our suppliers in the U.S."

Production validation of the Five starts in the fourth quarter of 2023. It will be on sale in 2024. A high-performance RS version will also go on sale with a 2-second sprint, carbon ceramic brakes and a top speed of more than 200 mph, says Michery.

The Mullen Five EV will feature wireless charging for smartphones. Mullen USA © Mullen USA The Mullen Five EV will feature wireless charging for smartphones. Mullen USA

Spending more cash in September, Mullen acquired a 60-percent controlling interest in Bollinger Motors. The company was launched in 2015 and created a few rugged looking electric SUVs and medium duty EVs. It developed its own battery packs, drivetrains, thermal and vehicle control software units, which Mullen can now source. Bollinger announced in November it will use Our Next Energy (ONE) in Michigan as a battery supplier. ONE says its batteries (without nickel or cobalt) are rated for Class 4 through Class 6 commercial trucks.

Analysts, in addition the Hindenburg authors, aren't convinced either, as they've seen the same story from many other startup EV companies that fell by the wayside.

"Mullen has made some interesting moves in recent months, including buying a controlling stake in Bollinger Motors and its acquisition of ELMS — which notably gives it a critical manufacturing footprint in the US," Autolist editor-in-chief David Undercoffler told Newsweek.

"But doubts still remain about the company's viability so it's too early to know whether they'll be able to make any kind of dent in the US auto industry. Earlier this year short-seller Hindenburg Research published a scathing report on Mullen that cast serious doubt on the company's legitimacy, and there's also the question about its ability to raise cash," he said.

New CCO John Schwegman's employment was announced a month after Bollinger and just days before Mullen announced it acquired the exclusive sales, distribution, and branding rights of the low-price i-go, a small, commercial EV that is European Union standard homologated, certified and ready for sale in the UK, Germany, Spain, France and Ireland.

Mullen just bought this facility in Indiana. Mullen USA © Mullen USA Mullen just bought this facility in Indiana. Mullen USA

Mullen says the first i-go vehicles are set for sale in Germany in December 2022 with a starting price of $11,999 plus tax through a distributor in Ireland. The company is engaged in licensing discussions with potential partners but says it won't affect its plan to produce and sell its EV lineup in the US.

To add to its manufacturing capability Mullen acquired Electric Last Mile Solutions' assets in the Chapter 7 approved bankruptcy transaction in October. Mullen will acquire the ELMS manufacturing plant in Mishawaka, Indiana, all inventory, and intellectual property. Mullen says the factory can produce up to 50,000 vehicles per year and it will be the first home of the Five sedan.

The Five can be reserved now at the company's website with a $100 deposit with a starting price of $55,000.

Mullen just started its United States road trip on the Strikingly Different tour, to give potential customers a test drive. The tour will be split up into two segments. First in November and December it will travel to Los Angeles, Las Vegas, Houston, Dallas, Memphis, Miami, Atlanta and Charlotte.

Next year Mullen will add the Five RS to the tour and head to Washington D.C., Philadelphia, New York, Boston, Detroit, Chicago, Denver, Seattle, Portland and San Francisco. Reservation holders will get the first tests. Mullen said the company will also be taking feedback from customers to make improvements and add features.

It's true that most startup automakers don't make a dent in the market, even as the switch from internal combustion engines to battery electric vehicles lays out an interesting opportunity for dozens of new companies. But some do. The Five is scheduled for sale in 2024. It will prove whether Mullen is the former or the latter.

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