Mullen’s Memphis deal muddies its future in Spokane
Company exec says lack of Washington state incentives raise barrierMarch 25th, 2021
Mullen Technologies Inc.’s future in Spokane is up in the air as the startup electric vehicle manufacturer eyes Memphis, Tennessee, for its future headquarters.
A press release from the company on March 18 says the company plans to establish its manufacturing headquarters in Memphis after inking a nonbinding agreement with the city to lease an 820,000-square-foot facility to develop the company’s 2P6 SUV crossover vehicle.
David Michery, CEO of Mullen Technologies, says the company is still reviewing its Spokane-area plans.
“We’re waiting to see if we’re going to get any incentives from the state (of Washington),” he says. If favorable incentives are offered, he says the company will continue pursuing a Spokane facility.
“If we don’t, we’re probably going to set up shop in another state,” he adds.
Last week, the Economic Development Growth Engine for Memphis & Shelby County approved a $40.5 million tax break for Mullen, which signed a nonbinding agreement to lease the manufacturing facility to build its electric SUV.
Todd Coleman, executive director of S3R3 Solutions, says, “The state of Washington does not have what I call programmatic incentives for green or electric vehicle manufacturers or battery research and development.”
A programmatic incentive refers to industry-specific incentives, like those in place for the aerospace industry in Washington state that allows for sales and use tax exemptions for the construction of new facilities used to manufacture commercial airplanes.
Coleman says the public development authority is exploring which nonprogrammatic incentives the state offers that could apply to the Mullen project, such as incentives for building warehouses over 100,000 square feet.
“There are things that economic development agencies should do to entice new companies, but I do get concerned when these projects get overly subsidized,” says Coleman. “We do want to find businesses that want to start here, grow here, and be part of the community, that contribute to the community … to make our community better.”
Mullen told Coleman that between the state of Tennessee and Shelby County, where Memphis is located, the company has been offered $127 million in tax credits.
According to EDGE’s documents, “Mullen has been evaluating other locations for its assembly plant in its home state of California, as well as pursuing a new construction project in Spokane. The Memphis area, however, provides distinct advantages over other opportunities.”
EDGE contends Mullen will benefit from the close proximity to an engineering facility the company has agreed to buy in Tunica, Mississippi.
Michery says Mullen has shifted its focus to developing and manufacturing its SUV over its initial plans to manufacture the Dragonfly K50 sportscar. There will be “very limited production” of the K50.
Mullen first announced its plans to come to Spokane in April 2019, when it inked a letter of agreement with S3R3 Solutions to develop a 1.3 million-square-foot facility for the assembly of its Dragonfly K50 sportscar as well as for lithium battery research and development. The facility was expected to employ at least 800 here by 2026.
When the letters of intent were established, they included safeguards for the city, county, and state that required Mullen to raise capital to prove its viability, says Coleman.
“The intent for us was to make sure that we did not spend public tax dollars chasing a project that was not viable,” he says, adding, “To date, they have not been able to meet any of those milestones.”
The letter of intent was extended at least twice while the startup worked to secure a deposit of $56 million to move forward with the project. The last letter expired on Dec. 31.
To that end, the company was pursuing a $450 million Advanced Technology Vehicles Manufacturing loan from the U.S. Department of Energy, as well as private debt and equity financing totaling more than $500 million. The loan application is still pending, says Michery.
Mullen, a private company, is in the final stages of a reverse-merger with publicly traded Net Element, according to reports from the company. A report from S&P Global shows the company had paid Net Element $653,317 as of March 12 for delays in filing registration statements with the U.S. Securities and Exchange Commission.
As part of the pending agreement, Mullen agreed to pay Net Element $13,333 a day for each day the company failed to file its registration statement after Jan. 15.
The deadline to complete the merger is Wednesday, March 31.
Mullen also reported the company has signed a definitive purchase agreement for a 120,000-square-foot manufacturing facility in Tunica, Mississippi early this month. The site is located within 50 miles of Memphis.
According to the Tunica County Assessor’s Office, the property hasn’t yet traded hands and is still owned by GreenTech Automotive, an electric vehicle maker that ceased operations in 2018.