Is it possible to mimic Tesla’s success in the electric vehicle market? One California-based company is betting it can, even as market analysts say it’s a risky proposition.
Mullen Technologies brought its all-electric sports car — the Qiantu K50 — to Washington, D.C., last month to give policymakers an in-person taste of the technology. It’s hoping the lobbying will entice policymakers to commit the dollars the company needs to get fully up and running.
“We’re an American company that’s going to break into the automotive space,” Jason Putnam, Mullen’s head of marketing, told the Washington Examiner. “That’s a tall order, but if you take kind of a strategic approach to it, you can be successful.”
Mullen’s strategy is to start with a flashy, luxury all-electric model to attract attention and interest, then pivot to a more all-consumer model. And if that approach sounds familiar, it’s because Tesla has already proved it works.
In Mullen’s case, the all-consumer model will be an electric crossover SUV, which it’s teaming up with a legacy carmaker on. Putnam wouldn’t reveal who the company’s partner will be, but Mullen’s Chief Technology Officer Frank McMahon said in an investor briefing in May that it’s a “top-tier European” carmaker.
It isn’t clear, though, whether Mullen can follow completely in Tesla’s footsteps. In fact, electric-car market analysts say it would be extremely difficult.
“It’s hard to make a better car than a Tesla right now,” said Adam Jonas, who heads Morgan Stanley’s global auto and shared mobility research. “That’s an incredibly risky strategy.”
Analysts say the biggest potential for an electric-vehicle newcomer is to find and try to fill markets currently devoid of electric models. One example is the pickup-truck space, according to Scott Shepard, a senior electric vehicle analyst at Navigant Research.
“A viable EV pickup truck is a really hard thing to produce, but it’s also something that differentiates from the market enough that it’s intriguing,” Shepard told the Washington Examiner.
For Jonas, the next wave of Tesla competitors will come from startups that are backed by well-funded technology companies such as Amazon, with “access to talent, capital, the ability to absorb losses, and a vested need to address emissions.”
The successful startups will also have to offer much more than a cool electric car, Shepard said. They’ll have to provide a “holistic solution” to address some of the barriers to mass-market electric vehicles, including support for charging infrastructure and battery research.
Mullen Technologies, for its part, is already working in the battery space. McMahon, speaking at the investor briefing in May, said the company is entering into a joint development agreement with a “top Fortune 50, patent-rich research and development organization” to work on next-generation lithium battery technology, with a prototype two years down the road.
The people at Mullen are excited about their car — a sleek, high-performance sapphire blue two-seater that McMahon described to the Washington Examiner as a “show-stopper vehicle,” and which he said is unlike anything currently on the electric-car market.
They’re also optimistic about the future of electric cars, even while standing outside Capitol Hill, where some lawmakers are arguing electric vehicles should get less, not more, financial support. A handful of oil-state senators, for example, want to eliminate federal tax credits for electric cars, which help bring down costs for consumers to purchase them.
The elimination of those credits would set back electric-car manufacturers.
“We would probably have to temper our forecast a bit if something like that did happen,” Putnam said. But he added it’s not something Mullen is “actively hedging against,” in part because they expect increasing support for electric vehicles going forward.
But that’s not to say Mullen Technologies doesn’t need a little help to get off the ground.
Cars are “billion-dollar propositions that are very cost-prohibitive to get into the manufacturing process,” Putnam said. “And once you have the production-ready vehicle, it’s very cost-prohibitive to get into the retail segment through marketing.”
Tesla, for example, has spent about $20 billion on capital expenses and research and development costs since its inception, Jonas said.
Mullen Technologies is seeking money from the Energy Department’s loan guarantee program to help with financing, hoping to reverse what company representatives describe as the department’s hesitancy in recent years to invest directly in electric vehicles. And it’s asking the Trump administration and lawmakers to support the construction of its manufacturing facility, which it plans to build in an economic opportunity zone in Spokane, Washington.
Putnam is optimistic the Trump administration supports electric cars overall — not just the company’s plans to build in an economic opportunity zone, a new investment tool created by the 2017 Trump tax law.
Market analysts, however, note that how robust or lacking national policy is in supporting electric cars has a significant impact on domestic manufacturers’ success.
“Policy really drives production,” Shepard said. “If you’re not looking at parity on policy, then you are really slipping behind the market.”
He added there is no doubt economic and environmental realities will push the passenger-car market to electrify eventually. Current policy trends would put European and Chinese manufacturers in a much better competitive position in an electrified future “because they have these domestic markets that are much more receptive to their EV offerings,” Shepard said.
In other words, there are many more incentives for foreign consumers to buy an electric car.
One bright spot for American companies could be city governments, which Jonas said he expects to act “even in the absence of a coherent national policy” toward electric transportation.
“We’re quite convinced that cities are going to take matters into their own hands, use financial, technological, and infrastructure tools such as congestion charging to administer incentives and penalties on a local level outside the scope of an EPA mandate,” he said.
Nonetheless, the next couple of years could be a difficult time for a newcomer like Mullen to break into the market.
That’s because there could be a slight slowdown in demand for electric cars, at least until increasing vehicle offerings and battery cost declines allow for price parity with traditional cars, Shepard said.
“There’s a lot of supply, and there’s just not yet really enough demand,” he said, projecting that market sweet spot will be sometime between 2025 and 2030.
Mullen representatives, though, see the market growth coming, and they think they’ve got the right car, and the right business strategy, to take advantage.
“There’s a big market coming at us,” McMahon said, adding consumers have generally shown they don’t like buying an electric vehicle from a traditional carmaker “because of branding image.”
“There’s precedents shown out there where people will accept new brands, and they want to go to an EV provider,” McMahon added. “You want to be part of that club.”
