Mullen Automotive (NASDAQ:MULN) stock was trending higher today before reversing course to trade down more than 12%. The driving force appears to be news that the electric vehicle company has started construction on its battery plant.
In a news release, Mullen Automotive said it has begun construction on its high-voltage battery research and development facility in Monrovia, California.
The company said it is retrofitting the facility to accommodate the production of electric vehicle battery packs to be used in Mullen’s vehicle lineup, including its ONE Cargo Van, FIVE Crossover and DragonFLY sportscar.
What Happened With MULN Stock
Mullen is working to develop its own battery supply in order to lessen its reliance on third-party suppliers and reduce risks associated with material and supply shortages, which are currently hampering the global automotive industry. “By taking battery pack production in-house,” Mullen says it will “lower costs and increase overall quality control in battery pack development.”
Previously, CODA Automotive had used the Monrovia facility for its battery pack research, particularly for an electric sedan that was under development. Mullen purchased the facility from CODA in 2014 and officially took over the high-voltage facility in 2017, renaming it Mullen Energy.
Why It Matters
Mullen stock has been in the news a lot recently. MULN shares rose more than 5% recently after it was announced that a former Tesla (NASDAQ:TSLA) executive has joined the company’s leadership team. John Taylor moved into the role of senior vice president of global manufacturing and strategic planning at Mullen. Taylor is a veteran of the automotive industry and had also worked for many years at General Motors (NYSE:GM).
The key executive hiring, along with news that Mullen has begun work on its own battery plant show that the startup is making a number of important moves to push its development further. Many electric vehicle startups are still at the drawing board phase and have not begun to develop or produce any automobiles. Mullen is in the process of launching its first commercial electric vehicle, the Mullen FIVE, which is being manufactured at its plant in Tunica, Mississippi.
Year to date, MULN stock has declined 62% to $2.16 a share, bringing its losses over the past year to 80%.
What’s Next for Mullen Automotive
News that Mullen Automotive has broken ground on its battery plant is positive for the company and its shareholders as it demonstrates that the company is taking concrete steps to ramp up production of its electric vehicles.
Markets at least initially reacted positively to the news, sending shares up in the pre-market session. However, MULN stock still has a lot of ground to make up given its steep selloff over the past year. Investors should watch for signs that this company’s stock may have now bottomed.
On the date of publication, Joel Baglole held a long position in GM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
