Mullen Automotive (NASDAQ: MULN) stock price went vertical on Monday, making it one of the best performers in Wall Street. It surged by over 85% in the regular session and continued the move by rising by 25% in the extended session. That surge means that the stock has risen by over 140% from its lowest point this year.

Mullen Automotive’s shares jumped sharply as investors moved back to electric vehicle stocks. This price movement happened after Elon Musk made a surprise trip to Beijing, leading to the approval of Tesla’s self-driving features in the country. The trip came a week after Tesla published disappointing financial results. 

Most EV companies jumped on Monday. Nio rose by over 2.45% while Rivian spiked by almost 4%. Lucid and VinFast jumped by almost 2% since Tesla is usually the key driver for electric vehicle companies.

Mullen Automotive shares spiked after California, the biggest state in the US, approved the company’s Hybrid and Zero-Emmission Truck and Bus Voucher Incentive Project (HVIP). 

The approval means that the company’s vehicles will be eligible for a government voucher of up to $45,000. This means that buyers of Mullen’s vehicle worth about $68,500 will now pay about $23,500. 

At the same time, these vehicles will also be eligible for the federal government’s $7,500 incentive, meaning that buyers will spend about $17,000. In a statement, David Michery, the CEO said:

These incentives mean that the trucks will be cheaper than gas-powered ones. For example, the Chevrolet 4,500 HG truck goes for about $78,000. Mullen’s truck has a 125-mile range, making it ideal for last-mile delivery solutions.

The announcement came a few days after Mullen manufactured its 500th truck in its Mississippi plant. It also revealed that it was running 18 pilot programs with large fleets, municipalities, and universities. 

Mullen is also planning to expand its retail presence in the US and Europe. It plans to sell 800 units in Europe this year.

The challenge for Mullen is that it has a limited balance sheet and is burning some substantial sums of money. It ended last quarter with over $81.5 million in cash and short-term investments as it made a net loss of over $61.5 million. 

Turning to the daily chart, we note that the MULN stock price bottomed at $2.38 earlier this month. It has now bounced back after this week’s good news. Still, the stock has remained below the 50-day Exponential Moving Average (EMA). 

Monday’s jump happened in a high-volume environment. Total shares that exchanged hands stood at over 66.2 million, higher than Friday’s 1.1 million. 

Therefore, I suspect that the stock will continue rising on Tuesday as investors continue cheering the new California news. In the medium term, however, there is a possibility that the stock will retreat as investors take profits.

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