Mullen Automotive Inc. (NASDAQ: MULN) (“Mullen” or the “Company”), an emerging electric vehicle (“EV”) manufacturer, announces the Company has filed for Foreign Trade Zone (“FTZ”) status with the U.S. Department of Commerce at its commercial vehicle manufacturing and assembly center located in Tunica, Mississippi. Mullen filed its application on March 25, 2024, and expects final determination within 30 to 90 days.
Upon approval as a designated FTZ site, Mullen would qualify for a variety of benefits including deferment of payments on duties owed related to import fees. With FTZ approval the Company would be able to align duty payment to vehicles sold so the pressure on cash flow would be dramatically inverted from the current model of paying duty at time of import. Upon approval, Mullen estimates that resulting deferred working capital on domestic sales could result in deferred capital outlays of $10 million for the remainder of FY 2024.
For international sales, the Company would be exempt from duties and taxes owed on vehicles sold, potentially delivering a bottom line pickup of 27% of the import cost associated with both Class 1 EV cargo vans and Class 3 EV trucks.
“Achieving FTZ approval status is an important strategic initiative to further strengthen Mullen’s supply chain management and deliver significant cash flow savings,” said David Michery, CEO and chairman of Mullen Automotive. “As we continue to expand our distribution internationally, the FTZ would provide a competitive advantage with no duties or tariffs paid on sales outside of the U.S.”
Potential FTZ benefits include:
- Enhanced global competitiveness
- Reduction of taxes and fees
- Increase logistics flexibility
- Relief from inverted tariffs
- Duty exemption on re-exports
- Duty elimination on waste, scrap and yield loss
- Weekly entry savings
- Duty deferral
- Improve global supply chain performance
What is a Foreign-Trade Zone?
A Foreign-Trade Zone (FTZ or Zone) is a secure area within the United States where foreign and domestic merchandise is generally considered to be in international commerce and outside of U.S. Customs territory for duty and tariff purposes. Companies that operate in foreign-trade zones can defer, reduce or eliminate Customs duties. FTZs were created by Congress in 1934 to encourage international trade and capital investment in the United States. Zones offer a competitive advantage for U.S.-based operations and attract foreign investment to America by encouraging multinational firms to establish operations in the U.S.
About Mullen
Mullen Automotive (NASDAQ: MULN) is a Southern California-based automotive company building the next generation of commercial electric vehicles (“EVs”) with two United States-based vehicle plants located in Tunica, Mississippi, (120,000 square feet) and Mishawaka, Indiana (650,000 square feet). In August 2023, Mullen began commercial vehicle production in Tunica. In September 2023, Mullen received IRS approval for federal EV tax credits on its commercial vehicles with a Qualified Manufacturer designation that offers eligible customers up to $7,500 per vehicle. As of January 2024, both the Mullen ONE, a Class 1 EV cargo van, and Mullen THREE, a Class 3 EV cab chassis truck, are California Air Resource Board (CARB) and EPA certified and available for sale in the U.S.
Source link:https://news.mullenusa.com/
