Weekly Newsletter Issue #7: Mullen's Buying Binge

Good morning and happy Monday. We were out last week so we're delivering an extra dose of EV news in this issue.

In today's newsletter:⚡ Headline: Struggling EV company Mullen consolidates struggling EV companies🚨 In Other News: Fisker Ocean production, Ford Tennessee factory, Faraday Revolt🧧 The China Report: CALB and Leapmotor listings, China unhappy with IRA tax breaks🗓️ Last Week Today: EV news you might have missed

Struggling EV Company Mullen Continues Buying Binge of Struggling EV Startups

In a scoop from Bloomberg, Mullen Automotive (Nasdaq: MULN) has emerged as the leading bidder for the bankrupt assets of Electric Last Mile Solutions (ELMS). This includes the now-silent former Hummer factory in Mishawaka, Indiana.A September 16 filing by the ELMS bankruptcy trustee showed that Mullen agreed to a $100 million stalking-horse bid. Other bids are due by October 3 and an auction will be held on October 7.ELMS was a commercial EV OEM that went public through a SPAC merger with Forum Merger III. Focusing on the Class 1 to Class 3 segments, ELMS planned to start production of its all-electric Urban Delivery van this fall. That was, until a board investigation and dispute with founders led to the termination of the latter, the resignation of the company's auditor, BDO, a subsequent SEC investigation, and the company's bankruptcy.Mullen's interest in ELMS comes just one week after it announced the purchase of a majority stake in Bollinger Motors for $148 million. Bollinger, another startup commercial EV OEM, struggled to raise money on its own and stopped production of several of its vehicle programs back in January. The deal with Mullen revives the Bollinger consumer truck along with its Class 4 delivery vehicle.Here is EVDigest's take (disclosure, ELMS was our former employer):If the bid is successful, Mullen will own a unique portfolio of commercial EVs spanning the Class 1 to Class 4 segments (might Workhorse be added next...?). And given that ELMS was quite literally on the last mile to production, if Mullen can pick up where ELMS left off - a really big if - it could have a vehicle on the road in the near future. Plus, cratering shipping container prices make the ELMS business model that relied on China's Wuling for kits more feasible. New developments have also made the competitive landscape for the Class 1 vehicle more attractive, with Nissan, Ford and Stellantis all announcing plans to stop production of their Class 1 gas vehicles. For now, they are focusing on the electrification of their larger, Class 2 delivery and work vans, and at a very slow ramp.But more likely than not, reality will have the upper hand over investor promises and presentations. Mullen has not shown itself capable of delivering on its original SPAC merger milestones for its FIVE crossover SUV. Investors have questioned its ability to pay for Bollinger (in response, Mullen issued a press release saying that it had available all the cash and stock "required to close" the acquisition, which is structured as a confusing series of installment payments). Any savings from lower shipping container prices for revived ELMS products would be offset by the loss of EV tax credits under President Biden's Inflation Reduction Act because the vans would only require final assembly in the U.S. Much of the great ELMS talent has also gone off to greener pastures. And Nasdaq recently sent a delisting notice after Mullen's share price stuck below $1.00 for more than 30 consecutive business days. It has an initial 180 period to bring that price to over $1.00 for 10 consecutive business days to remain in listing compliance.So, a stroke of genius that will establish a commercial EV empire or a bygone ingredient to an already rotten mix? Only time will tell and that's the fun of it.

🚨 In Other News 🚨

Fisker ($FSR) Oceans come off the production line. The first pre-production vehicles came off the high-volume line at Magna Steyr's plant in Graz, Austria. The news suggests Fisker is on track for its official November 17 start of production date. Founder Henrik Fisker also teased plans to launch in India and said that the company is scouting showroom space.

General Motors ($GM) investing $760 million in Ohio for EV parts. The investment at the Toledo Propulsion Systems plant will prepare the line to make drive units for the 2024 Chevrolet Silverado EV, 2024 GMC Sierra EV and current GMC Hummer EVs 

Faraday Future ($FFIE) gets EPA mileage, shareholder lawsuits and a bad review. No dull day for Faraday. The FF91 received an EPA range of 381 miles. Meanwhile, a group of top shareholders including the founder sued the board alleging that a "bitterly divided" board is trying to push the company into an unnecessary bankruptcy (perhaps they are taking lessons from ELMS' demise). And an Ars Technica review of the FF91 called the vehicle "very far from fully baked".

Ford ($F) breaks ground on $5.6 billion battery complex. The site in western Tennessee, known as BlueOval City, stretches six square miles and is being constructed as part of a JV with South Krean battery company SK Innovation. The site will include a battery complex to support both Ford and Lincoln, and an electric truck assembly plant (the first all-new assembly plant Ford has built since 1969). 

GM shuts down Hummer EV reservations. "Incredible demand" has led to Hummer EV reservations being fully booked, according to GM spokesperson Mikhael Farah. GM has over 90,000 orders for the Hummer EV and SUV. In June, GM's Factory Zero was only able to make 12 Hummer EVs a day.

LG inks deals with Canadian miners for cobalt and lithium. To expand its footprint in North America, LG has signed three deals with Canadian miners for cobalt and lithium sourcing. All three deals were signed within 24 hours. Canadian miners expect more deals to come as a result of tax credits in President Biden's Inflation Reduction Act.

Kia may shift EV6 production to the U.S. The move in 2024 would make the popular EV6 crossover eligible for U.S. EV tax credits. Volkswagen and Mercedes have already made such moves to produce EV models in Tennessee and Alabama, respectively.

UAW to seek faster recognition at GM JV battery plant. UAW President Ray Curry said the union would seek a speedier recognition that does not require a vote. Curry noted that Ultium, the JV between GM and LG Energy, would not recognize the UAW without a vote.

BYD to host Europe product launch on September 28. Just days before NIO's launch (it now has 720 employees in Europe), BYD is expected to launch the Tang, Han, and Yuan Plus (locally Atto 3) in Europe. 

🧧 The China Report 🧧 

China September NEV retail sales expected to break records. CPCA estimates showed 580,000 NEV retail sales for September, a new record. Total retail sales in China for the month (including non-EV) are expected at 1.95 million vehicles.

CABL plans Hong Kong listing and seeks to raise $1.7 billion. The third-largest battery company by market share is targeting a listing date of October 6. Cornerstone investors include Xpeng and Tianqi Lithium. CABL plans to use the majority of the raised funds on the construction of new production facilities. 

China says it suspects President Biden's EV tax credits break WTO rules. Shu Jueting, spokesperson of the Ministry of Commerce, said that the IRA clause that rules out tax breaks for vehicles from abroad “discriminates against similar imported goods, and is a suspected breach of the World Trade Organization principles”.

NIO's ($NIO) third brand reportedly named "Himalaya". The name seems to fit with the codename for the company's second brand: "ALPS". Meanwhile, the company is preparing for its official Europe launch event in several weeks and plans to release its smartphone by the end of next year. 

The Wuling Hongguang Cabria has a price. The price for the small convertible was finally revealed to be up to RMB 102,000, or $14,660. The LFP battery on board gives it an approximate range of 280 kilometers. More than 150,000 people have entered into a lottery to be among the first 200 customers.

Leapmotor set to raise $800 million in Hong Kong. The shares were priced at the bottom of a HK$48 to HK$62 range, with proceeds raised through IPOs in Hong Kong down 80% over 2021. The company focuses on mid- to high-end EVs, and 43,748 vehicles in 2021 and 51,994 in the first half of this year.

Li Auto ($LI) moves up L8 launch date. The release was moved ahead by one month to September 30. Li also said it would launch the Li L7, a mid to large-size five-seat SUV priced within RMB 400,000, in the first quarter of 2023. It also teased the Li L6, a mid-size five-seat SUV priced within RMB 300,000.

🗓️  Last Week Today 🗓️ 

• The Detroit Auto Show entered a new, and not-so exciting era. "Bleak" was how one attendee described it. A Bloomberg reporter said: "what you’ve heard is true: this year’s auto show is ruff”.

• Tesla ($TSLA) ZEV credits a hot commodity. Tesla is sitting on a hoard of credits that rival car companies may want if they can't make EVs fast enough under new IRA rules.

• NIO ET5 wait times. Consumers ordering the ET5 today can expect wait times of up to 23 weeks. 

• BYD starts production of $3 billion project. The investment at its fourth industrial park in Shenzhen, where it is headquartered, will provide parts and components for new EVs.

• Ford dealers must set no-haggle prices. Ford told dealers they will need to invest $1.2 million and follow other standards in order to compete with Tesla.

• Nikola trial draws renewed interest. Businessweek covers the history of Nikola's unwinding and the story of its founder, Trevor Milton.