NetworkNewsWire
Editorial Coverage: Since 2013, the sale of electric vehicles
(EV) in the United States has grown by an average of 25% a year
(http://nnw.fm/B2GRb), a stunning figure when
compared to the anemic 1.4% overall growth of the US auto market
over the same interim (http://nnw.fm/hwjS2). Despite the stellar growth rate,
EV sales only account for a miniscule 2% share of the US automobile
market but are projected to exceed 20% of
annual vehicle sales by 2030. With a tenfold increase in market
share expected over the next decade, market penetration has just
begun, and there’s clearly still enormous upside. In a bold foray
into the electric vehicle market, Net Element Inc. (NASDAQ: NETE)
(NETE Profile)
recently
announced the execution of a definitive merger agreement to merge
with Mullen Technologies Inc., a Southern
California-based EV company. Mullen currently has seven retail
locations in California, one in Arizona, and expects to launch a
luxury sports car in the first half of 2021. With leading EV brands
such as Tesla, Inc.
(NASDAQ: TSLA), Nikola
Corporation (NASDAQ: NKLA), NIO Inc (NYSE:
NIO) and Workhorse Group
Inc. (NASDAQ: WKHS) driving consumer interest within the
segment, Net Element looks to capitalize on the growing
fervor for high-quality electric vehicles and drive shareholder
value. One look at the sporty, luxurious Dragonfly K50
indicates that NETE is on the right path.
- Net Element Inc. and Mullen Technologies Inc. executed a
definitive agreement to merge on August 5th 2020 and is
currently pending shareholder and NASDAQ approval.
- The electric vehicle market is set to grow to 56 million
vehicles per annum by 2040, rising from a mere 2 million per annum
today
- By focusing on electric SUV’s and solid-state battery
technology, Net Element & Mullen Technologies have carved out
an attractive and unique consumer niche for their product
Click here to view the
custom infographic of the Net Element Inc. (NASDAQ:
NETE) editorial.
Pending Merger with Mullen Technologies
Inc.
Net Element Inc.'s (NASDAQ: NETE) (NETE Profile)
legacy business model has been firmly centered within the Fintech
space, with the company operating a payments-as-a-service
transactional model and value-added services platform for small to
medium enterprises in the U.S. and selected emerging markets. Net
Element has plans to divest itself of its payments processing
business and portfolio to transform the company into a pure-play
electric vehicles manufacturer (http://nnw.fm/fVbA6) going forward.
"We feel, after considering an array of strategic alternatives,
that the agreement with Mullen provides our shareholders with the
most compelling opportunity," said Net Element chairman and Chief
Executive Officer Oleg Firer. "We conducted an extensive search of
companies that have disruptive technologies and believe that Mullen
represents the best path forward. COVID-19 has created a unique set
of challenges for our payment processing business, as many of our
payment processing customers are located in the Northeast, which
has been hit especially hard by the coronavirus. We expect that the
merger with Mullen will create a new path forward that should
reward our long-time shareholders." (http://nnw.fm/ntP1A)
Electric Vehicle Manufacturing Plant
Unusual for an industry segment where most carmakers sink in
billions of dollars in EV start-up investments, (http://nnw.fm/2A4td), Mullen Technologies expects to
spend less than $400 million and take only 24 months prior to bring
its initial electric vehicles to market. To this end, Mullen
extended its letter of intent with the West Plains Airport
Authority dba S3R3 Solutions and executed a letter of intent with
Axiom Financial for $135 million for the funding to acquire and
build out the electric West Plains plant. The Company expects
to begin production by 2022 and enter the electric Sport Utility
Vehicle (SUV) market with the launch of the MX-05, a mid-size
luxury SUV that will be featured as a battery electric vehicle.
Mullen has created a different business model to enter the EV
market with core tenants that include: fast-to-market, highly
efficient, ready and proven initial platform leveraging an existing
vehicle and designed for global market needs (development reduced
from 4 years to 24 months), and complemented with a portfolio of
competitively priced vehicles in the fast-growing Electric SUV
segment.
Once complete, Mullen Technologies expects to begin using the
West Plains facility to manufacture and assemble its revolutionary
Dragonfly K50 electric sports car. Initially featured at the
New York International Auto Show in April 2019 (http://nnw.fm/zw98Y) and winner of the Governor’s
Choice Award at the 2019 Balboa Bay Club’s Classic Auto Show, the
K50 has been designed in conjunction with Mullen’s partners at
CH-Auto. With over 1,000 vehicles already sold in China
following its launch in August 2019, Mullen expects to begin
retailing the car in the United States during the first half of
2021 (http://nnw.fm/fD9Rj).
Following in Tesla’s footsteps
In the interim and ahead of the launch of its West Plains
facility, Mullen Technologies has pursued a number of avenues in
raising the required capital needed for the project, including
seeking an Advanced Technology Vehicles Manufacturing loan from the
U.S. Department of Energy (http://nnw.fm/H6agW).
“It’s a loan program for vehicle technologies that get better
than the median or average miles per gallon,” explained Todd
Coleman, executive director of the West Plains Public Development
Authority.
Notably, the Department of Energy’s loan program was also
initially used by Tesla, with the company being granted a $465
million when they were first getting started in early 2010, and has
also been availed of by carmakers such as Ford Motor Co and Nissan
North America.
The Booming Electric Vehicle Market
According to BloombergNEF’s Electric Vehicle Outlook report
published last year, electric vehicles are set to make up for more
than half of global passenger car sales by 2040, with passenger EV
sales to rise from 2 million worldwide in 2018 to 56 million by
2040. Meanwhile, conventional passenger vehicle sales are expected
to more than halve to 42 million by 2040 from 85 million today
(http://nnw.fm/d7UEO).
Whilst the growth of the EV market has been predicted to lead to
a marked reduction in automobile emissions – with Bloomberg
foreseeing a reduction in gasoline and diesel demand by an
estimated 13.7 million barrels per day within the next decade—it is
also set to drive a surge in demand for lithium-ion batteries,
which will rise from 151 gigawatt-hours (GWh) in 2019 to 1,890 GWh
by 2030 (http://nnw.fm/5erJQ). Inevitably, the exponential
growth rate projected for the use of lithium-ion battery technology
is also set to lead to a huge and simultaneous expansion in the
mining of cobalt, nickel and lithium – key raw materials used in
the manufacture of lithium-ion powered batteries – which in turn
have led to rising concerns of the environmental impact resulting
from the mining activities.
Mullen’s Environmentally Friendly (and Powerful)
Automotive Solution
Mullen Technologies has sought to address these concerns ahead
of the launch of its flagship MX-05 SUV, a fully electric mid-sized
luxury SUV which will be launched as the carmaker’s flagship car
model by the 2022. Designed to capitalize on the surge in demand
for SUV’s and pickups in the United States – sales of which grabbed
a record 70 percent of the market in 2019 (http://nnw.fm/zeNN9) – Mullen’s mid-sized MX-05 will
form part of a three-model range which will ultimately include both
compact and large-sized SUV options.
Remarkably, Mullen has chosen to power its electric SUV offering
through the use of solid-state battery technology. The batteries,
which will provide a significant enhancement in performance
relative to the ubiquitous lithium-ion batteries in use by most EV
makers today, will allow the vehicles to extend their target range
to as much as 640 miles on a single charge (as compared to an
average 325 miles for lithium-ion battery powered vehicles) whilst
enabling the SUVs to be driven in temperatures ranging from -40
degrees centigrade to 60 degrees centigrade. Most notably, the
solid-state batteries will also be fully synthetic, voiding the
need for additional mining of natural resources and further
reinforcing the company’s environmentally friendly credentials.
Electric Vehicle Space Sees Deluge of Investor
Interest
A common denominator for the U.S.-listed automotive sector thus
far in 2020 has been the share price performance of electric
vehicle manufacturers relative to their more conventional
counterparts. Tesla, Nikola Corporation, NIO Inc. and Workhorse
Group have all seen their market values rise by over 100 percent
over the first half of the year with Tesla recently usurping Toyota
to become the world’s most valuable automaker – in spite of the
electric car maker only delivering 367,500 electric vehicles in
2019, less than 4 percent of Toyota’s total (http://nnw.fm/9T8iy).
Through its planned merger with Mullen Technologies, Net Element
expects to join this select group as institutional investors and
market participants compete to gain earlier access to the
disruptive corporations which are rapidly changing the state of the
global automobile market. Following its merger, Net Element will
focus on the US electric SUV market, which has been forecast to
grow to an addressable market size of $38 billion by 2026,
representing an annualized growth rate of 40 percent according to
consultancy IHS Markit (http://nnw.fm/Ac00N).
With the company’s management targeting the production of an
aggregate 75,000 electric SUVs by 2025, accounting for an estimated
3% of total forecast US electric SUV sales volumes, Net Element’s
future revenue growth and earnings potential seem to be extremely
promising.
EV Industry Sees Accelerating Growth
Momentum
Investors have driven an influx of capital into the electric
vehicle space, focusing on pure-play electric vehicle companies
unencumbered by a legacy automotive business. In particular,
investors have focused on companies who have been able to
consistently grow their vehicle volumes or who have been able
provide prospective electric vehicle solutions to niche segments
within the wider economy.
Tesla,
Inc. (NASDAQ: TSLA), currently the most valuable
automotive company in the world by market cap, has seen its product
offering expand in recent years beyond its flagship Model S sedan
and the falcon-winged door Model X sports utility vehicle to the
simpler mid-sized sedan, Model 3 and its crossover utility vehicle,
the Model Y (http://nnw.fm/PN9rd). Tesla delivered 367,500 electric
vehicles in 2019, an increase of 50% year-on-year, and has stated
that it has the installed capacity to exceed 500,000 vehicle
deliveries in 2020 (http://nnw.fm/7Lnj4).
Nikola
Corporation (NASDAQ: NKLA), focuses on the development
of smart transportation and is the only pure-play hydrogen powered
vehicle company listed in the U.S. Since its listing on June 11,
2020, the company has seen its share price more than double, with
investors touting Nikola Corporations’ potential to become a global
leader in manufacturing zero emissions heavy duty battery-powered
and hydrogen-electric trucks (http://nnw.fm/1imIf).
NIO Inc.
(NYSE: NIO) is a U.S.-listed, Chinese electric
carmaker which has been one of the global pioneers within the
electric SUV space, through the launch of its ES8 model in December
2017 followed by its compact SUV offering, the ES6 in late 2018.
NIO delivered 31,913 vehicles in 2019 (http://nnw.fm/iYT7h) and has delivered 10,429 vehicles
thus far this year (as of end-May 2020).
Workhorse Group Inc. (NASDAQ: WKHS)
is a technology company focused on manufacturing drone-integrated
electric vehicles directed towards the last-mile delivery sector.
The company has previously signed agreements with the likes of UPS
(http://nnw.fm/xxUx0) and Ryder (http://nnw.fm/Lg7pH) to supply electric delivery
trucks and is currently bidding on the US Postal Service’s contract
to replace their existing fleet of trucks (http://nnw.fm/0ZUwb). Workhorse also owns a 10% stake
in Lordstown Motor (LMC), which has recently unveiled the
Endurance, a line of all-electric pickup trucks.
A Bright Future
US equity investors have been focused on rewarding pure-play
electric vehicle companies which are able to capitalize on the
explosive growth in EV demand whilst forgoing the distraction of a
pre-existing conventional automotive business. Following its
planned merger with Mullen Technologies, Net Element seems poised
to catapult itself into the select tier of listed EV manufacturers
in the United States – and if it is able to execute on its plan to
manufacture an aggregate 75,000 electric SUV’s by 2025, the company
will firmly establish its place as one of the largest pure-play
electric vehicle manufacturers in the world.
“We believe the timing of this merger is ideal for Mullen
Technologies,” said Mullen Technologies CEO and founder David
Michery. “We look forward to working with the Net Element team to
complete the merger as quickly as possible.” (http://nnw.fm/xl0Fa)
For more information about Net Element (NASDAQ: NETE) please
visit (NETE
Profile).
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