Shares of Mullen Automotive (NASDAQ:MULN) stock are in the red today, despite the announcement of a new collaboration with China’s Qiantu Motors. Qiantu and its affiliated companies have granted Mullen the North and South American intellectual property and distribution rights of the DragonFLY K50 electric vehicle (EV) through a five-year licensing agreement. Mullen will also be in charge of assembling the vehicle in the Americas.
According to CEO David Michery:
“This agreement with Qiantu is an important milestone for the Company. Not only does it settle a long outstanding dispute between our respective companies, but also presents the opportunity to fulfill my vision for a supercar that would rival some of the best supercars in the world. Since day one, we have received overwhelmingly positive feedback for this vehicle, including our original debut at the 2019 New York Auto Show and the Indy 500 in May 2019.”
MULN Stock: Mullen Receives Rights to DragonFLY K50
Qiantu’s vehicle is currently available on Alibaba (NYSE:BABA). It has a price of $122,000 for one to nine units and $111,111 for more than 10 units. Mullen did not immediately disclose its selling price for the K50, which it plans on rebranding as the Mullen GT and GTRS.
A Redditor notes that the vehicle has been on Mullen’s website since 2018, displaying a range of 236 miles and an electronically limited max speed of 125 mph. In Mullen’s announcement, the company added that the K50 will have an updated powertrain to target a top speed of over 200 mph and a 0-60 mph acceleration time of under two seconds.
The K50 is similar to Mullen’s GO, formerly called the I-GO, in that both vehicles are sourced from China. Still, Mullen will have to tweak and re-engineer the K50 in order to meet U.S. homologation requirements and customer expectations. The changes will be “in line with Mullen’s vehicle design language currently found in the Mullen FIVE and Mullen FIVE RS.”
In exchange for the rights to K50, Mullen agreed to pay Qiantu $6 million. Mullen is also obligated to purchase Qiantu’s vehicle kits and will provide the company with warrants to purchase up to 75 million shares of MULN. On top of that, Mullen will pay Qiantu “$2,000,000 for deliverable items under the IP Agreement” and a $1,200 royalty fee for each homologated vehicle sold in the Americas throughout the five-year period.
On the date of publication, Eddie Pan held a LONG position in BABA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
