Short-selling specialist Hindenburg Research went on the attack Wednesday, characterizing electric vehicle startup Mullen Automotive as being “yet another fast-talking EV hustle.” Hindenburg listed a litany of egregious behavior by Mullen, saying that the purported automaker distorted its operations and deceived investors.
Hindenburg alleges Mullen misrepresented its battery test results and made false assertions about its vehicles, leading to large swings in its stock price.
Firm drains Mullen’s battery claims
“The company’s stock has spiked 316% in the past couple of months driven by retail investor euphoria over bold claims of ground-breaking technology, near term production of its EV vans, and a major as-yet-unnamed Fortune 500 customer,” Hindenburg stated.
“Despite only spending $3 million in R&D in 2021, Mullen claims its solid-state battery technology is on track for commercialization in 18 to 24 months, putting it head of every major technology and automaker in the industry who have collectively invested billions on solving the problem.”
The accusations continue.
“Mullen recently press released an update on its battery testing, sending its stock soaring 145% in a day. In reality, the ‘news’ appears to be a rehash of testing the company had already announced in 2020. Mullen apparently misrepresented the test results, according to the CEO of the company that performed the tests. Its CEO told us of Mullen’s press release: ‘We never would have said that. We never did say it and certainly wouldn’t have said it based on the results of testing that battery.’”
Non-existent business agreements
Hindenburg further asserts that an announced a joint venture to manufacture its solid-state battery technology never existed, according to an unnamed Mullen senior executive, who told Hindenburg that Mullen CEO David Michery is “fast talking” and a “hustler”.
According to Hindenburg, Mullen’s battery technology comes from a one-year-old Chinese battery startup whose website no longer functions.
But the accusations go beyond Mullen’s battery technology.
Where are the cars?
In 2019, the Mullen said it would market the Qiantu K50 as the Mullen DragonFly, with its debut in the U.S. market expected sometime in 2020. “Following the reveal, Mullen immediately defaulted on its payment obligations to Qiantu, leading to termination of the agreement in October 2019. Mullen continued to market the vehicle as its own,” Hindenburg said.
And despite Mullen’s pronouncements, the car has yet to reach these shores. Mullen’s website states that the car is “coming soon”, with stats that were once cutting edge: 236 miles of range and 0-60 mph time of 4.6 seconds.
This didn’t stop Michery from introducing the Mullen Five EV crossover with great bravura at the L.A. Auto Show last year. Officials said that it planned to build the sleek-looking model at its existing 127,000 square foot facility in Tunica, Mississippi.
Yet Hindenburg insists that Mullen “has only a handful of job openings for its plant, and hasn’t begun significant hiring, according to the President of the Tunica County Chamber of Commerce.”
Are there any real customers?
Hindenburg says that the “electric cargo vans that Mullen claims it will be manufacturing are actually Chinese EVs rebranded with a Mullen logo. Import records show the company recently imported 2 vehicles from China, one of each model.”
Neither of the vans have EPA certification, according to the research done by the firm, something that typically takes 12-18 months. Yet Mullen claims to have $60 million worth of purchase orders for Class 2 commercial EV fleet vans from a small cannabis retailer with one location and a new online store that prefers to ship using the postal service.
The bottom line
The enumeration of misdeeds continues, but the upshot is that Mullen’s honesty has been called into question, leading the company to join a growing number of upstarts EV manufacturers with questionable intentions, including Nikola Corp. and Lordstown Motors Corp., two manufacturers previously called into question by Hindenburg Research.
But the company proved prescient. In July 2021, former Nikola Motor Chief Milton was indicted by federal prosecutors. Five months later, Nikola Corp. agreed to pay $125 million to settle civil charges levied against the company by the Securities and Exchange Commission claiming Nikola defrauded investors by making false claims about its vehicles. Similarly, the U.S. Securities and Exchange Commission opened an investigation into Lordstown Motors in July concerning claims it’s made as well as its reverse merger.
Mullen hasn’t responded to Hindenburg’s charges, and has not responded to inquiries made by TheDetroitBureau.com.
Mullen’s share price has declined 16.93% in the past five days through Wednesday, and is down an additional 4.15% in pre-market trading.