Mullen Automotive buys ELMS inventory, plant and intellectual property for cash

Mullen Automotive absorbed another EV start-up. Today’s acquisition includes Electric Last Mile Solutions, or ELMS, which filed for bankruptcy in June. Mullen received court approval last week to acquire ELMS’ Indiana manufacturing facility, its electric vehicle inventory and all of its intellectual property.

Mullen Automotive ($MULN) is a Southern California-based electric vehicle startup founded in 2014 with the goal of providing affordable electric vehicles built entirely on American soil. Although the company has yet to deliver an electric vehicle to market, it has come close twice. First, it tried to bring the legendary Coda EV back from the dead, then struck a deal with Qiantu in China to try to bring Dragonfly K50 assembly to the United States.

Following a merger in 2020, Mullen again pivoted its strategy and focused on its own revolutionary electric vehicle model – the FIVE crossover SUV. The startup surprised us yet again by shifting its production targets elsewhere, claiming a majority stake in Bollinger Motors last September. He pledged to put Bollinger’s ill-fated B1 and B2 electric trucks into production using some of the money from his acquisition purchase.

Just over a month later, Mullen Automotive announced an investment in another electric vehicle start-up, acquiring Electric Last Mile Solutions and all of its assets, including a large production plant.

The Mullen FIVE EV, one of many potential models the start-up could assemble at its newly acquired factory / Source: Mullen Automotive

Mullen approved for cash purchase of ELMS business

EV startup shared this it has been approved by the US Bankruptcy Court on October 13 in a Chapter 7 transaction, which includes ELMS’s former production facility in Mishawaka, Indiana. Here is the list of assets acquired during the purchase of ELMS:

  • All intellectual property (IP).
  • All inventory including vehicles (finished and unfinished), finished goods, parts module components, raw materials, tooling (including but not limited to product specific tooling ) and all manufacturing data necessary or reasonably useful for the assembly of the Class 1 Electric Commercial Delivery Vans and Class 3 Commercial Delivery Chassis Cab.
  • Real estate located in Mishawaka, Indiana, together with all buildings, improvements and fixtures.
  • All tangible personal property, including equipment, machinery, furniture, supplies, computer hardware, data networks, servers (with data and software), communications equipment, software, disks and all other data storage media.

With the acquisition, Mullen Automotive gains a production footprint with the capacity to produce up to 50,000 vehicles per year. The start-up said that the acquisition of the said factory would allow it to accelerate the production of the Mullen FIVE and Bollinger B1 and B2 EVs by 12 months.

Mullen currently operates a plant in Tunica, Missouri, which will now become the company’s commercial manufacturing center, responsible for the production of Mullen and Bollinger Class 1 through 6 utility vehicles. Eventually, FIVE production will transition from Tunica at the newly acquired plant in Indiana. Mullen Chairman and CEO David Michery spoke of the cash purchase:

Bollinger’s acquisition by Mullen was one of the largest deals of its kind in the electric vehicle market. Upon closing of the ELMS transaction, the company will be able to strategically leverage all of its acquired assets to shorten its production path and aggressively expand into the commercial and consumer electric vehicle market.

Mullen Automotive did not share the purchase price for ELMS in its recent press release, but the start-up reportedly offered over $93 million in cash and other consideration, according to previous court documents. The startup claims to have access to $275 million to complete the acquisition of ELMS based on its cash and “funding commitments” of up to $240 million.

Mullen intends to launch Class 1-3 commercial delivery electric vehicles in 2023, followed by the start of FIVE production in 2024.

Electrek’s point of view

It’s interesting to see Mullen Automotive acquire another start-up that couldn’t ride out the full-scale production bump. The newly acquired facility could certainly help the startup answer its own call to fate by becoming a legitimate automaker, but they still don’t pass the sniff test here at Electrek.

We would like to be wrong. We are not rooting against Mullen Automotive in any way. The FIVE and FIVE RS look very cool, but this company remains a simple start-up with a few prototypes until it starts supplying viable electric vehicles to customers.

Why spend all that money buying other technologies from companies instead of using those funds to build your own electric vehicles as planned? Makes you wonder. We fully understand the entry into last-mile and commercial electric vehicles – this segment is booming. But why now, before successfully scaling his own vehicle?

Hopefully Mullen hasn’t spread himself too thin here financially, especially on the “funding commitments” wings that make up the vast majority of his available funds. Again, rooting for them, but it’s definitely a “show, don’t tell” situation.

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