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On Monday, March 25, 2024, Company filed FTZ application and expects final determination within 30 to 90 days
FTZ status and benefits would include opportunity for improving Company cash flow through reduction of taxes, fees and deferment of import duties
Mullen estimates that resulting deferred working capital on domestic sales could result in deferred capital outlays of $10 million for the remainder of fiscal year 2024
BREA, Calif., April 01, 2024 (GLOBE NEWSWIRE) -- via IBN -- Mullen Automotive, Inc. (NASDAQ: MULN) ("Mullen" or the "Company"), an electric vehicle ("EV") manufacturer, announces today 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:
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.
Posted In: MULN
