EVgo (EVGO) - 2022 Q4 - Annual Report

Cautionary Statement Regarding Forward-Looking Statements Forward-Looking Statements Overview This section outlines EVgo's forward-looking statements, which are based on current expectations but subject to significant risks and uncertainties, with no obligation to update - Forward-looking statements cover future financial performance, business strategies, market size, expansion plans, and operational results, identifiable by words like 'expect,' 'plan,' 'objective,' 'seek,' 'grow,' 'potential,' 'outlook,' 'forecast,' 'target,' 'anticipate,' 'intend,' 'believe,' 'estimate,' 'continue,' 'project'[16] - Key risks include adverse changes to EVgo's business, cyclical demand, revenue fluctuations, capital market disruptions, competition, EV market growth, expansion capabilities, new feature development, acquisition integration, personnel retention, legal proceedings, dependence on third-party contractors, capital access, supply chain issues, inflation, safety/environmental regulations, government policies, partnerships, intellectual property, and general economic/political conditions[17][20] - EVgo operates in a highly competitive and rapidly changing environment, making it difficult to predict all risks or assess the full impact of factors that could cause actual results to differ materially from forward-looking statements[16] Frequently Used Terms Definitions of Key Terms This section provides definitions for frequently used terms throughout the Annual Report, ensuring clarity and consistent understanding of industry-specific jargon, company entities, and financial concepts - Key terms defined include AC (alternating current), ChaaS (charging-as-a-service), DCFC (direct current fast charging), EV (electric vehicle), GWh (gigawatt-hour), kW (kilowatt), kWh (kilowatt-hour), OEM (original equipment manufacturer), and various company-specific entities and agreements (e.g., CRIS, EVgo Holdings, PlugShare)[22][24][32][34][41][45][46][50][52] - The definitions clarify the legal and operational context of EVgo Inc. and its subsidiaries, including its 'Up-C' structure and the acquisition of PlugShare LLC[29][34][39][75][76] PART I Item 1. Business EVgo Inc. is a leading provider of EV charging solutions, operating one of the largest public fast-charging networks in the U.S., powered by 100% renewable energy - EVgo is a leader in EV charging solutions, building and operating infrastructure for individual drivers, rideshare, commercial fleets, and businesses[64] - Since 2019, EVgo's network has been powered by 100% renewable energy through the purchase of renewable energy certificates[64] - EVgo operates approximately 900 fast charging locations across over 60 metropolitan areas and 30 states, making it one of the nation's largest public fast charging networks[64] Overview EVgo employs a flexible business model with multiple revenue streams, focusing on expanding its network of ultra-fast chargers and offering diverse services to various customers - EVgo's business model is flexible, generating revenue from developing and operating EV charging sites, dispensing electricity, and prioritizing ultra-fast charger build-out[65] - The company expands its network by focusing on locations with favorable traffic, utilization, and financial returns, using proprietary technology, analytical tools, and commercial partnerships[65] - EVgo serves the rapidly growing EV fleet segment by developing and deploying charging solutions at depots, off-site hubs, or via its public network, often with guaranteed payment streams[67] - EVgo eXtend is a white-label solution that helps partners build and operate EV charging stations, generating revenue from site development, equipment, engineering, construction, and ongoing operations/maintenance[68] - EVgo develops software-based services like time-of-use pricing, EVgo Reservations, subscription plans (EVgo Basic, EVgo PlusMAX), EVgo Rewards, and Autocharge+ to enhance customer experience and provide accretive revenue streams[70][71] - EVgo owns PlugShare, a leading global platform for EV drivers to locate charging stations, provide feedback, and utilize tools like Pay with PlugShare and EV Trip Planner; PlugShare also provides data to automakers and advertising services[72] Company History EVgo was founded in 2010 as NRG EV Services, LLC, underwent ownership changes, and became EVgo Inc. through a business combination in 2021 - EVgo Services was founded in October 2010 as NRG EV Services, LLC, a subsidiary of NRG Energy, Inc., and began operations in 2011[73] - In 2016, NRG sold a majority interest to Vision Ridge Partners, and in 2020, LS Power acquired EVgo[73] - EVgo Inc. was incorporated in Delaware on August 4, 2020, as Climate Change Crisis Real Impact I Acquisition Corporation (CRIS), and completed a business combination with EVgo Holdco on July 1, 2021, adopting an 'Up-C' structure[74][75] - On July 9, 2021, EVgo acquired PlugShare LLC (f/k/a Recargo, Inc.), which later changed its name to PlugShare LLC on March 16, 2022[76] Market Overview The EV market is experiencing significant growth, driven by increased model availability, lower costs, and government incentives, with demand for DCFC expected to grow rapidly - The EV market is experiencing significant growth, with new battery EV sales in the U.S. increasing by 65% in 2022 compared to 2021, reaching approximately 812,000 units[77] - Market growth is driven by increased EV model availability (over 60 models anticipated in 2023), lower upfront prices, reduced total cost of ownership (TCO), increased range, and federal/state incentives (e.g., Infrastructure Investment and Jobs Act, Inflation Reduction Act)[77][78][79][80] - Major automakers like GM, Ford, Mercedes-Benz, and Volvo have set aggressive targets for EV sales, with some aiming for all-electric lineups by 2030-2035[77] - Forecasts predict approximately 8 million EVs on U.S. roads by 2025, nearly 34 million by 2030, and over 125 million by 2040, representing about 50% of all motor vehicles[77] - Demand for DCFC is expected to grow faster than overall EV charging demand, projected to constitute over 25% of all public EV charging by 2030, up from less than 15% in 2021[85] EV Chargers and Standards EVgo deploys advanced DC fast charging stations with modular power units, supporting CCS and CHAdeMO standards, and accessible to Tesla drivers via adaptors - EVgo has deployed a next-generation DC fast charging station architecture with modular power units under software control, allowing dynamic power sharing between vehicles[87] - This advanced architecture reduces upfront capital and operating costs, maximizes ROI, increases operational flexibility, and lowers operating risk by meeting future charging requirements like higher speeds and dynamic energy management[87] EV Charger Categories and Standards | Category | Power Level | Charging Speed | Typical Locations | EVgo Network (as of Dec 31, 2022) | | :------- | :---------- | :------------- | :---------------- | :--------------------------------- | | DCFCs | 50kW - 1000V DC | 100 miles in 5-10 min | Public, commercial | 2,184 DCFCs at over 900 locations | | Level 2 AC | 3.6-19.2 kW | Up to 20 miles/hour | Homes, workplaces, long dwell time public | Over 1,200 Level 2 AC chargers | | Level 1 AC | 1.2-2.4 kW | Approx. 4-10 miles/hour | Standard household outlet | None | | Standards | Connector Types | OEMs | Notes | | CCS | Combined Charging System | U.S. (excl. Tesla), European | Supports AC and DC charging | | CHAdeMO | CHAdeMO | Japanese (Nissan, Honda, Toyota) | Being phased out in North America | | Tesla | Proprietary | Tesla | CCS1 adaptor enables Tesla drivers to use EVgo's CCS stations; NACS opened to market in 2022 (technical specs for air-cooled and 500V DC only) | - EVgo's chargers support CCS and CHAdeMO standards, with newer stations focusing on CCS; with Tesla's CCS1 adaptor and EVgo's Autocharge+, EVgo's CCS stations are accessible to many Tesla drivers, offering a seamless plug-and-charge experience[90][91] Products and Services EVgo offers a comprehensive suite of charging solutions, including retail, OEM programs, commercial fleet services, white-label solutions, and software-driven ancillary services - EVgo offers retail charging with various pricing plans (member, subscription, non-member) and partners with Site Hosts (retail, grocery, offices) who benefit from providing charging amenities at no upfront cost[92] - OEM charging programs involve direct contracts with automakers to provide charging services and related offerings like co-marketing, data services, and digital applications, serving as a core customer-acquisition channel[93] - Commercial charging solutions include public network access for high-volume fleets (rideshare, delivery) and dedicated charging solutions where EVgo builds, owns, and services infrastructure at depots or off-site hubs, with flexible pricing models[94][95] - EVgo eXtend provides hardware, design, construction, operations, maintenance, and software integration services for partners who own the charging assets, expanding EVgo's network footprint[96] - Ancillary services include software-driven digital, development, and operations services such as customized digital applications, charging data integration, loyalty programs, microtargeted advertising, and charging reservations[97] Market Opportunity & Strategy EVgo's strategy focuses on disciplined capital allocation and leveraging proprietary data science to identify optimal charging sites, supported by technology-enabled products and services - The U.S. EV market share was approximately 6% of all vehicle sales in 2022, with significant growth expected, making charging infrastructure critical for consumer and commercial adoption[98] - EVgo's strategy focuses on identifying optimal charging sites using proprietary data science, financial modeling, and GIS techniques, considering EV penetration, traffic, fleet electrification, OEM input, and government policies[101] - The company's strategy includes disciplined capital allocation with rigorous financial analysis and internal rate of return requirements for investments[110] - EVgo's core strategy elements include site development, engineering, and construction (with teams for leasing, design, and project management), equipment procurement (Supply Chain team), and charging site operations (24/7/365 NOC and Customer Care Center, ReNew program)[103] - EVgo provides value to stakeholders through charging services for fleets and OEMs, and amenity charging for site hosts (retailers, airports), leveraging its expertise in charging infrastructure[103] - Technology-enabled products and services, such as the mobile app, Autocharge+, customized OEM portals, and sophisticated diagnostics, are key to strengthening customer relationships and competitive positioning[103] Competition The EV charging market is highly competitive, with EVgo differentiating itself through network scale, DCFC expertise, OEM/fleet partnerships, and software-enabled services - The EV charging market is evolving and becoming increasingly competitive, with players involved in equipment manufacturing, network operation, and software development[106] - EVgo's competitors in public fast charging include Electrify America, Blink, ChargePoint, Shell Recharge Solutions, Volta, Tesla, BP, Voltera, TerraWatt, Flo, and some electric utilities[107] - Key competitive factors include charger count, locations, accessibility, customer experience, network reliability and scale, charger connectivity, charging speed, software-enabled services, brand reputation, access to vendors, public policy support, pricing, and capital access[108] - EVgo's competitive advantages include network scale and design, experience in DCFC infrastructure, OEM and fleet partnerships, brand equity, established supply chain, differentiated station design, and software-enabled services[109] Suppliers and Service Providers EVgo relies on third-party vendors for charging equipment, construction, and maintenance, with a significant portion of equipment supplied by Delta and Graybar Electric - EVgo relies on third-party vendors for charging equipment design, testing, and manufacturing; in 2022, Delta and Graybar Electric supplied 81.9% of EVgo's total charging equipment[113] - EVgo has commercial relationships with multiple EV charger manufacturers, including SK-Signet, Delta, BTC, ABB, IoTecha, and LiteOn, and outsources station construction and maintenance to specialized contractors[114] - Electricity for charging stations is purchased directly from local utilities for approximately 64% of sites (representing 76% of GWh throughput), with the remainder obtained through Site Hosts[115] Customers, Partnerships and Strategic Relationships EVgo maintains strategic partnerships with OEMs, Site Hosts, and fleet operators, though it faces customer concentration risks and contractual obligations with potential penalties - EVgo has partnerships with key OEMs (GM, Nissan, Toyota), Site Hosts, and fleet operators to acquire customers, build brand awareness, and benefit from promotional programs and capital expenditure funding[116] Customer Concentration | Metric | December 31, 2022 | December 31, 2021 | | :----- | :---------------- | :---------------- | | Accounts Receivable | 1 customer (19.7%) | 2 customers (32.4%) | | Total Revenue | 2 customers (42.9%) | 1 customer (10.5%) | - EVgo's five-year contract with GM (amended to 3,250 fast charger stalls by March 31, 2026) requires EVgo to meet quarterly installation milestones and maintain 95% network availability, with potential liquidated damages up to $15.0 million for non-compliance[121][122][123] - EVgo has two agreements with Nissan, including the Nissan 2.0 Agreement for joint marketing, charging credit programs, and a capital-build program requiring installation of 210 chargers by February 28, 2025, with potential penalties of up to $70,000 per delayed site[125][127] - A 2022 agreement with Pilot Company and GM involves building, operating, and maintaining up to 2,000 DC fast charging stalls at approximately 500 Pilot Company sites, with EVgo subject to construction milestones and potential liquidated damages[129][130][131] Intellectual Property EVgo protects its intellectual property through patents, trademarks, copyrights, trade secrets, and confidentiality protocols, holding 16 patents as of December 31, 2022 - EVgo protects its intellectual property through patents, trademarks, copyrights, trade secrets, and confidentiality protocols[132] - As of December 31, 2022, EVgo held 16 patents and had 15 additional patent applications pending in the U.S. and abroad[133] Governmental Regulation EVgo's operations are subject to various state and local regulations, but generally not utility regulation, and the company actively leverages public grants and regulatory credits - EV charging station installations are subject to varying state, regional, and local regulations, including permitting, inspection, licensing, and certifications[134] - California regulations require EVSE transactions to be measured in kWh or megajoules, prohibiting per-minute billing for AC chargers installed after Jan 1, 2021, and DC chargers after Jan 1, 2023[135] - Public utilities commissions generally do not regulate EV charging service providers as utilities, providing EVgo with flexibility in rate setting and fewer regulatory burdens[136] - EVgo actively pursues public grants, subsidies, and incentives (e.g., from California Energy Commission, IIJA funding) to reduce capital expenditures for DCFC development[137][139] - The Inflation Reduction Act (IRA) extended and revised federal tax credits for EV charging stations (Section 30C), capping them at $100,000 per item but adding eligibility requirements like installation in rural/low-income census tracts and prevailing wage/apprenticeship mandates[138] - EVgo earns regulatory credits, such as Low Carbon Fuel Standard (LCFS) credits, in states with such programs (e.g., California, Oregon), generating additional revenue from their sale to obligated buyers[147] - EVgo markets its electricity as 100% renewable through the purchase of certified Renewable Energy Certificates (RECs), subject to FTC Green Guides regulations[145] Human Capital Management EVgo prioritizes a diverse and inclusive workforce, focusing on employee well-being, professional development, and competitive compensation and benefits - EVgo prioritizes fostering a diverse workforce to encourage innovation and achieve collective success, integrating human capital management with ESG objectives[150][151] - As of March 1, 2023, EVgo had 295 employees (292 full-time), none represented by a labor union, and maintains positive employee relationships[153] - The company is committed to health and safety, empowering employees to question unsafe acts, and promoting a culture of inclusion and anti-discrimination through DEI task forces[154][156][157][159] - EVgo's compensation program includes base salary, annual incentive bonuses, and long-term equity awards, complemented by benefits like health insurance, uncapped paid time off, parental leave, and a 401(k) plan[163] ESG Matters EVgo integrates ESG principles into its business strategy, focusing on environmental protection, climate change, sustainable communities, and equal access to expedite EV adoption - EVgo considers ESG integral to its business strategy and mission to expedite mass EV adoption, focusing on environmental protection, climate change, sustainable communities, and equal access[164] Available Information EVgo's SEC filings and amendments are publicly accessible on its investor relations website shortly after electronic filing - EVgo's SEC filings (10-K, 10-Q, 8-K) and amendments are publicly available on its investor relations website (investors.evgo.com) as soon as reasonably practicable after electronic filing[165] Item 1A. Risk Factors This section outlines various risks that could materially and adversely affect EVgo's business, financial condition, and results of operations, spanning operations, market, technology, finance, structure, and regulations - EVgo is an early-stage growth company with a history of operating losses and expects significant expenses and continuing losses in the near- to medium-term, requiring potential additional financing[175] - The company's growth is highly dependent on the rapid adoption and demand for EVs and OEMs' ability to supply them, with potential slowdowns or decreases in demand harming EVgo's business[176] - EVgo faces significant competition in the evolving EV charging market from established and emerging companies, with competitors potentially responding faster to new technologies or offering more competitive pricing[186] - Reliance on a limited number of customers and OEM partners (e.g., two customers accounted for 42.9% of 2022 revenue) poses a risk, as the loss of a significant partner could adversely affect operating results[191] - EVgo is susceptible to supply chain disruptions, inflationary pressures, and increases in interest rates, which can raise costs for charging equipment, goods, services, and personnel[221][228] - Material weaknesses in internal control over financial reporting have been identified, stemming from insufficient trained resources and ineffective risk assessment/information processes, which could harm investor confidence if not remediated timely[288][289] Summary of Risk Factors EVgo faces risks including operating losses, dependence on EV adoption, intense competition, customer concentration, contractual obligations, supply chain issues, and regulatory credit volatility - EVgo is an early-stage growth company with a history of operating losses and expects to incur significant expenses and continuing losses[170] - The company's growth is highly dependent on the rapid adoption and demand for EVs and OEMs' ability to supply them[170] - EVgo faces competition from numerous companies and expects increased competition in the future[170] - Dependence on a limited number of customers and OEM partners means the loss of a significant partner could adversely affect operating results[170] - Obligations under the GM agreement require substantial charger installations, with potential penalties for non-compliance[170] - Reliance on a limited number of vendors for charging equipment and support services poses a risk if any partner is lost[170] - Risks include construction delays, cost overruns, supply chain disruptions, the need for additional funding, and inflationary pressures increasing costs[170] - EVgo's business is susceptible to risks from increased focus on climate change, dependence on electricity availability, and changes to fuel economy standards or alternative fuels[170] - A material portion of revenue comes from regulatory credit sales, which are subject to factors beyond EVgo's control[170] - The EV market benefits from government incentives, and their reduction or elimination could adversely affect financial results[170] Risks Related to EVgo's Business EVgo faces risks from operating losses, dependence on EV adoption, rapid growth strain, vendor reliance, construction delays, natural disasters, vandalism, electricity availability, OEM/fleet relationships, customer support, cybersecurity, mobile app interoperability, and acquisition integration - EVgo has a history of operating losses and negative operating cash flows, with $246.5 million in cash as of December 31, 2022, and a net cash outflow of $238.7 million for the year[175] - The company's growth is highly dependent on the rapid adoption of EVs, which can be affected by perceptions of EV features, competition from other fuel types, supply chain shortages, and macroeconomic factors[176][177][180] - Rapid growth places significant strain on management, operations, and infrastructure, requiring continuous improvement in IT systems and internal controls[181][182] - EVgo relies on a limited number of vendors for charging equipment (e.g., Delta and Graybar Electric provided 81.9% in 2022), increasing risks from production interruptions or supply chain disruptions[113][212] - Construction of charging stations involves risks of cost overruns, delays (e.g., permitting, utility interconnection), and reliance on third-party contractors, which can impact contractual commitments and profitability[216] - Natural disasters, extreme weather events, and public safety power shut-offs can disrupt operations, damage facilities, and reduce demand for EV charging[229][230] - EVgo's charging stations are exposed to vandalism or misuse, increasing replacement and maintenance costs, which may not be fully covered by insurance[232] - Dependence on electricity availability and potential increases in utility pricing or restrictive regulations could adversely affect operating results[234][235] - The success of EVgo's business relies on maintaining relationships with automotive OEMs and fleet partners, with potential revenue decline if these relationships are not sustained or new ones developed[237][238][240] - Failure to offer high-quality support to Site Hosts or drivers, or to maintain high charger availability and user experience, could harm EVgo's business and reputation[242] - Cybersecurity risks, including malware, viruses, and hacking, could lead to service interruptions, data loss, and financial liabilities, despite implemented security measures[243][245] - EVgo's mobile applications depend on interoperability with mobile operating systems and networks not controlled by the company, and issues could adversely affect usage[248] - Risks associated with integrating the PlugShare acquisition and potential future acquisitions include diversion of management resources, unexpected financial results, and exposure to unknown liabilities[250][251][253] Risks Related to the EV Market The EV market faces risks from alternative fuels, slow fleet electrification, regulatory credit volatility, reduced government incentives, and new tariffs, all impacting EVgo's financial results - Changes to fuel economy standards or the success of alternative fuels (e.g., hydrogen, biodiesel) could negatively impact the EV market and demand for EVgo's services[254] - Rideshare and commercial fleets may not electrify as quickly as expected due to costs, budget constraints, or administrative approvals, impacting EVgo's revenue growth[255] - A substantial portion of EVgo's revenue comes from selling regulatory credits (e.g., LCFS credits), which are subject to market price fluctuations and potential changes or elimination of government programs[256][258][259] - The EV market benefits from government rebates, tax credits, and financial incentives; their reduction or elimination could negatively affect EV adoption and EVgo's financial results[260] - The Inflation Reduction Act (IRA) revised Section 30C tax credits for EV charging infrastructure, introducing new requirements (e.g., rural/low-income census tracts, prevailing wage) that could increase costs or limit eligibility[260] - New tariffs and policies, such as Buy America requirements for the NEVI Program, could incentivize overbuilding, favor U.S.-manufactured equipment, or increase costs and delay EVgo's ability to qualify for grants[215][261] Risks Related to EVgo's Technology, Intellectual Property and Infrastructure EVgo faces risks from intellectual property infringement, failure to protect its technology, lack of industry standards, undetected software defects, service interruptions, and the need for continuous innovation - EVgo may face intellectual property infringement or misappropriation claims, leading to costly litigation, damages, or the need to redesign products[264] - Failure to protect its technology and intellectual property (e.g., patents, trade secrets) could result in competitors offering similar products, eroding EVgo's competitive advantage and revenue[265][266] - The lack of industry standards in EV charging can lead to uncertainty, increased competition, and unexpected costs, especially if proprietary standards (like Tesla's) or new regulatory standards emerge[268][269][270] - EVgo's technology (hardware and software) could have undetected defects, errors, or bugs, leading to reduced market adoption, reputational damage, product liability claims, and significant remediation costs[271][274][275] - Interruptions or delays in service, communications outages, or inability to increase capacity at third-party data centers (Amazon Web Services, Google) could impair EVgo's services and harm its business[276][277] - The rapid technological change in the EV market requires continuous development of new products and innovations; delays could adversely affect market adoption and financial results[278][279][280][281] - EVgo incurs significant research and development costs for new products, which may not always result in revenue or market acceptance[282] - Limitations on leveraging customer data due to privacy regulations could impact research and development, expansion efforts, and the ability to derive revenue from value-added services[283] Financial, Tax and Accounting-Related Risks EVgo faces financial risks from fluctuating operating results, material weaknesses in internal controls, changes in tax laws, inflationary pressures, and financial services industry instability - EVgo's financial condition and operating results are likely to fluctuate quarterly due to factors like sales timing, service costs, new installations, OEM model introductions, demand for DC fast charging, and seasonal driving patterns[285] - Material weaknesses in internal control over financial reporting were identified (lack of trained resources, ineffective risk assessment, and information/communication processes), which could harm investor confidence if not remediated[288][289] - Changes to U.S. tax laws (e.g., Inflation Reduction Act's new requirements for EV charging infrastructure tax credits) or exposure to additional income tax liabilities could affect EVgo's profitability and increase costs[290][293] - Expanding business operations into new jurisdictions could lead to fluctuating effective tax rates, increased complexity, and greater risk of tax examinations[295][296] - Continuing inflationary issues and associated monetary policy changes (e.g., interest rate hikes) may increase the cost of charging equipment, other goods, services, and personnel, impacting capital expenditures and operating costs[298] - Adverse developments in the financial services industry (e.g., bank failures like SVB) could impair EVgo's access to funding, credit arrangements, and deposits, negatively impacting liquidity and operations[299][300] Risks Related to EVgo's "Up-C" Structure and the Tax Receivable Agreement EVgo's "Up-C" structure grants EVgo Holdings significant influence, and the Tax Receivable Agreement (TRA) obligates EVgo to substantial, potentially accelerated, payments that could impact liquidity - EVgo Holdings owns the majority of EVgo's voting stock, allowing it to substantially influence matters requiring stockholder or board approval, and its interests may conflict with those of other stockholders[301][304] - As a holding company, EVgo depends on distributions from EVgo OpCo and Thunder Sub to pay taxes, make payments under the Tax Receivable Agreement (TRA), and cover corporate expenses[306][307] - EVgo is required to make substantial payments under the TRA to EVgo Holdings (85% of net cash tax savings from tax basis increases), and the amounts and timing are imprecise and dependent on future events[308][309][312] - In certain cases (e.g., change of control, early termination), TRA payments may be accelerated and significantly exceed actual tax benefits, potentially impacting EVgo's liquidity and reducing consideration for Class A common stockholders in a change of control[314][315][316] - EVgo will not be reimbursed for TRA payments if tax benefits are subsequently disallowed, potentially leading to payments greater than actual cash tax savings[317] - If EVgo OpCo were to become a publicly traded partnership taxable as a corporation, it could result in significant tax inefficiencies and an inability to recover TRA payments[318][319] Risks Related to Legal Matters and Regulations EVgo faces legal and regulatory risks from evolving privacy laws, environmental and safety regulations, hazardous waste liabilities, and increasing ESG compliance demands - Privacy concerns and evolving laws (e.g., CCPA, CPRA) regarding consumer data collection, use, and disclosure may adversely affect EVgo's business, limit service offerings, and lead to increased compliance costs or penalties[320][321][322] - Existing and future environmental, accessibility, health, and safety laws and regulations could increase compliance and operating costs, or result in fines for non-compliance[324][325] - Failure to properly handle or dispose of hazardous wastes (e.g., electronic wastes, batteries) could result in liability under environmental laws like CERCLA and RCRA[327] - Increasing attention to ESG matters from stakeholders and regulators may increase compliance costs (e.g., SEC's proposed emissions reporting rules), impact brand reputation, and affect access to capital[328][330] Risks Related to EVgo's Securities Risks to EVgo's securities include its "controlled company" status, charter provisions discouraging lawsuits or takeovers, potential competition from affiliates, stock dilution, lack of dividends, and warrant accounting impacts - EVgo is a 'controlled company' under Nasdaq rules, allowing it to rely on exemptions from certain corporate governance requirements (e.g., independent directors on committees), which may reduce protections for stockholders[333][334][335] - Provisions in EVgo's Charter and Delaware law may discourage lawsuits against directors and officers by designating specific forums for disputes, potentially limiting stockholders' ability to bring claims[336][337][338] - Provisions in EVgo's Charter (e.g., preferred stock issuance, anti-takeover measures) could inhibit a takeover, potentially limiting the price investors are willing to pay for Class A common stock and entrenching management[339][340][341] - LS Power, non-employee directors, and their affiliates are not limited in competing with EVgo, and corporate opportunity provisions in the Charter could allow them to benefit from opportunities that might otherwise be available to the company[342][343] - Sales of substantial amounts of Class A common stock (e.g., by the company, EVgo Holdings, or other large holders) could adversely affect the market price and dilute existing stockholders[344][345] - EVgo has no current plans to pay cash dividends on Class A common stock, meaning investors may only receive a return on investment if they sell shares for a price greater than their purchase price[346] - The exercise of outstanding warrants (18,097,120 as of Dec 31, 2022) would increase the number of shares eligible for resale and dilute stockholders[347][349] - Accounting for warrants as a liability at fair value, with changes reported in earnings, may adversely affect the balance sheet, statement of operations, and market price of Class A common stock[350] Item 1B. Unresolved Staff Comments This item indicates that there are no unresolved staff comments from the SEC regarding the company's previous filings - The registrant has no unresolved staff comments[352] Item 2. Properties EVgo's corporate headquarters is in Los Angeles, California, with additional owned or leased facilities and land across the U.S. for operations, all considered suitable for business - EVgo's corporate headquarters is located at 11835 West Olympic Boulevard, Suite 900E, Los Angeles, CA 90064[353] - As of February 28, 2023, EVgo owned or leased facilities and land for additional offices, a testing facility, a warehouse, and host sites and hubs throughout the U.S.[353] - Agreements with Site Hosts, which are operating leases, allow EVgo to operate charging stations on their properties, with compensation including fixed fees, cost reimbursements, revenue sharing, and per-customer charge payments[354] Item 3. Legal Proceedings EVgo is not currently a party to any material legal proceedings, though it may be subject to lawsuits, investigations, and claims in the ordinary course of business - EVgo is not currently a party to any material legal proceedings[356] - The company may be subject to legal proceedings or claims arising in the ordinary course of business, including contractual disputes and employment/health/safety matters[356] Item 4. Mine Safety Disclosures This item is not applicable to EVgo Inc., as the company is not involved in mining operations - This item is not applicable[357] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities EVgo's Class A common stock and Public Warrants trade on Nasdaq, with no cash dividends paid to date or planned, as future earnings are prioritized for operations and expansion - EVgo's Class A common stock trades on the Nasdaq under the symbol 'EVGO', and its Public Warrants trade under 'EVGOW'[360] - As of March 15, 2023, there were 65 holders of record for Class A common stock and six for warrants; there is one holder of record for Class B common stock, which has no public market[361] - EVgo has not paid any cash dividends on its Class A common stock to date and has no current plans to do so, intending to retain future earnings for operations, expansion, and debt repayment[362] Item 6. [Reserved] This item is reserved and contains no information - This item is reserved[365] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on EVgo's financial condition and results of operations for 2022 and 2021, covering revenue, recent developments, KPIs, operating factors, and critical accounting policies - EVgo's revenue streams include charging services (retail, OEM, commercial), eXtend offerings, regulatory credit sales, OEM network revenue, and ancillary services (data, software)[369][370][371][372][383] - Total revenue for 2022 increased by 146% to $54.6 million, primarily driven by a $17.7 million increase in eXtend revenue and a $7.9 million increase in retail charging revenue[414] Key Financial Highlights (2022 vs. 2021) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change ($) | Change (%) | | :---------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total Revenue | $54,588 | $22,214 | $32,374 | 146% | | Cost of Revenue | $41,460 | $17,058 | $24,402 | 143% | | Depreciation, net of capital-build amortization | $18,779 | $11,986 | $6,793 | 57% | | Gross Loss | $(5,651) | $(6,830) | $1,179 | 17% | | General and Administrative Expenses | $126,713 | $71,086 | $55,627 | 78% | | Operating Loss | $(149,503) | $(89,831) | $(59,672) | (66)% | | Net Loss | $(106,240) | $(57,762) | $(48,478) | (84)% | | Network Throughput (GWh) | 44.6 | 26.4 | - | - | | Number of DC Stalls | 2,184 | 1,676 | - | - | - EVgo had $246.5 million in cash, cash equivalents, and restricted cash as of December 31, 2022, down from $485.2 million in 2021, with a net cash outflow of $238.7 million for the year[444] - The company identified material weaknesses in internal control over financial reporting due to insufficient trained resources and ineffective risk assessment/information processes, but these did not result in material misstatements to the financial statements[288][737][738] Overview EVgo's business model focuses on developing and operating EV charging sites, generating diverse revenue streams from charging services, regulatory credits, and ancillary offerings, all powered by 100% renewable energy - EVgo's business model is founded on developing and operating EV charging sites, dispensing electricity to individual drivers, commercial drivers, and fleet operators[369] - Revenue streams include charging services (retail, commercial, OEM), regulatory credit sales, network revenue from OEM contracts (including infrastructure build programs), eXtend services (white label solutions), and ancillary services (software, data, marketing)[370][371][372] - EVgo aims for long-term margin expansion and customer retention through its diverse revenue streams and commitment to 100% renewable energy for its network[368][369] Recent Developments Recent developments include global economic disruption, government initiatives promoting EV adoption, a Q4 2022 ATM stock sale, and a Delaware Court of Chancery ruling validating EVgo's capital structure - The global economy has experienced disruption and volatility from COVID-19 (reduced network throughput, construction delays, supply chain issues), the Russia-Ukraine conflict (geopolitical instability, supply disruptions), rising inflation, and instability in the financial services sector[373][374][375] - Government initiatives like the Bipartisan Infrastructure Law and the Inflation Reduction Act are expected to continue promoting EV adoption and charging infrastructure through incentives and tax credits, though the full impact of the IRA is uncertain[377] - In Q4 2022, EVgo sold 1,588,340 shares of Class A common stock through an 'at the market' (ATM) program, generating $10.4 million in net proceeds[378][380] - On February 21, 2023, the Delaware Court of Chancery validated EVgo's stockholder vote for CRIS's certificate of incorporation and the effectiveness of EVgo's Charter and related securities, resolving prior uncertainty regarding its capital structure[381][382] Key Components of Results of Operations This section details EVgo's revenue sources, cost of sales components, depreciation, general and administrative expenses, other financial items, and income tax provision, all impacting operating results - Revenue is generated from charging services (retail, OEM, commercial), eXtend offerings, regulatory credit sales, OEM network services, and ancillary services[383] - Cost of sales includes energy usage fees, site operating and maintenance expenses, warranty/repair services, and site lease/rent, with energy usage fees increasing due to utility pricing challenges[385] - Depreciation, net of capital-build amortization, reflects depreciation of charging equipment offset by amortization of capital-build liabilities from third-party funding[386] - General and administrative expenses include payroll, IT, customer service, office rent, and professional services, expected to increase with business growth[388] - Other financial components include interest expense (related party and general), interest income, unrealized gains/losses on marketable securities, and changes in fair value of warrant and earnout liabilities[391][392][393][394] - Income tax provision is de minimis due to operating losses and a full valuation allowance on net deferred tax assets[395] Key Performance Indicators EVgo tracks Network Throughput, Number of DC Stalls, and Receipts as key performance indicators to measure operational and financial progress - EVgo uses Network Throughput (total GWh consumed), Number of DC Stalls (operational DC stalls), and Receipts (total revenue + change in deferred revenue) as key performance indicators[397][398][399] Key Performance Indicators (2022 vs. 2021) | Indicator | December 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------------ | :------------------ | | Network throughput (GWh) | 44.6 | 26.4 | | Number of DC stalls on EVgo network | 2,184 | 1,676 | Receipts Calculation (2022 vs. 2021) | (in thousands) | 2022 | 2021 | | :------------- | :-------- | :-------- | | GAAP revenue | $54,588 | $22,214 | | GAAP changes in deferred revenue | $13,070 | $21,925 | | Total Receipts | $67,658 | $44,139 | | Year-over-year percentage change in total Receipts | 53% | - | Factors Affecting EVgo's Operating Results EVgo's operating results are influenced by EV adoption rates, fleet electrification pace, market competition, government incentives, technological advancements, and regulatory credit market dynamics - EVgo's revenue growth is directly tied to the adoption and usage of passenger and commercial EVs, which drives demand for charging infrastructure and services[402] - Factors impacting EV adoption include perceptions of EV features, range anxiety, competition from other fuel types, supply chain disruptions, and macroeconomic conditions[402] - The pace of fleet electrification is an emerging market influenced by total cost of ownership, vehicle availability, competitive charging services, and government regulations (e.g., California's ACT rule, Clean Miles Standard)[403] - Increased competition in the EV charging industry, with evolving business models and new entrants, could impact EVgo's market share, revenue, and profitability[404] - Government mandates, incentives, and programs (e.g., federal tax credits, IIJA, IRA) significantly influence the EV market, but their reduction or elimination could adversely affect EVgo's financial results and expansion potential[405][406][407] - Technology risks include the need to integrate with evolving EV ecosystem advances (model characteristics, charging standards, hardware, software, batteries) and the potential for existing technology to become obsolete, requiring significant investments[408] - Revenue from regulatory credit sales (e.g., LCFS credits) is exposed to market and supply/demand dynamics, and changes to these programs could adversely impact future revenue[410] Results of Operations EVgo's 2022 results show significant revenue growth, improved gross margin, but increased operating and net losses primarily due to higher general and administrative expenses Consolidated Results of Operations (2022 vs. 2021) | (dollars in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :---------------------------------- | :---------- | :---------- | :---------- | :--------- | | Revenue | $54,513 | $21,652 | $32,861 | 152% | | Revenue from related party | $75 | $562 | $(487) | (87)% | | Total revenue | $54,588 | $22,214 | $32,374 | 146% | | Cost of revenue | $41,460 | $17,058 | $24,402 | 143% | | Depreciation, net of capital-build amortization | $18,779 | $11,986 | $6,793 | 57% | | Cost of sales | $60,239 | $29,044 | $31,195 | 107% | | Gross loss | $(5,651)| $(6,830)| $1,179 | 17% | | General and administrative expenses | $126,713 | $71,086 | $55,627 | 78% | | Depreciation, amortization and accretion | $17,139 | $11,915 | $5,224 | 44% | | Total operating expenses | $143,852| $83,001 | $60,851 | 73% | | Operating loss | $(149,503)| $(89,831)| $(59,672)| (66)% | | Interest expense | $(21) | $0 | $(21) | * | | Interest expense, related party | $0 | $(1,926) | $1,926 | 100% | | Interest income | $4,479 | $69 | $4,410 | * | | Other (expense) income, net | $(815) | $607 | $(1,422) | (234)% | | Change in fair value of earnout liability | $3,481 | $2,214 | $1,267 | 57% | | Change in fair value of warrant liability | $36,157 | $31,105 | $5,052 | 16% | | Total other income, net | $43,281 | $32,069 | $11,212 | 35% | | Loss before income tax expense | $(106,222)| $(57,762)| $(48,460)| (84)% | | Income tax expense | $(18) | $0 | $(18) | * | | Net loss | $(106,240)| $(57,762)| $(48,478)| (84)% | | Net loss attributable to Class A common stockholders | $(27,575) | $(5,906) | $(21,669) | (367)% | | Gross margin | (10.4)% | (30.7)% | - | - | | Operating margin | (273.9)% | (404.4)% | - | - | Revenue Disaggregation (2022 vs. 2021) | (dollars in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :--------------------- | :---------- | :---------- | :---------- | :--------- | | Charging revenue, retail | $18,895 | $11,041 | $7,854 | 71% | | Charging revenue, commercial | $3,363 | $2,420 | $943 | 39% | | Charging revenue, OEM | $941 | $812 | $129 | 16% | | Regulatory credit sales | $5,652 | $3,023 | $2,629 | 87% | | Network revenue, OEM | $2,451 | $1,510 | $941 | 62% | | eXtend revenue | $18,443 | $789 | $17,654 | * | | Ancillary revenue | $4,843 | $2,619 | $2,224 | 85% | | Total revenue | $54,588 | $22,214 | $32,374 | 146% | - Gross loss improved by $1.2 million (17%) to $5.7 million in 2022, with gross margin improving to negative 10.4% from negative 30.7% in 2021, driven by higher margins on equipment revenue and improved leverage of fixed network operating costs[425] - Operating loss increased by $59.7 million (66%) to $149.5 million in 2022, primarily due to a $55.6 million increase in general and administrative expenses (higher payroll, abandoned projects, professional services, software, insurance)[426][428] - Net loss increased to $106.2 million in 2022 from $57.8 million in 2021, mainly due to increased G&A and depreciation/amortization, partially offset by higher gains from fair value changes in earnout and warrant liabilities and increased interest income[434] Non-GAAP Financial Measures EVgo utilizes non-GAAP financial measures such as Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted General and Administrative Expenses, EBITDA, and Adjusted EBITDA to provide a clearer view of underlying business performance - EVgo uses non-GAAP financial measures like Adjusted Cost of Sales, Adjusted Gross Profit (Loss), Adjusted General and Administrative Expenses, EBITDA, and Adjusted EBITDA to evaluate performance and manage the business[436][437] - These non-GAAP measures exclude items such as depreciation, share-based compensation, loss on disposal of property, impairment expense, bad debt, and changes in fair value of earnout/warrant liabilities to provide a more meaningful representation of underlying business performance[438] Adjusted Gross Profit Reconciliation (2022 vs. 2021) | (dollars in thousands) | 2022 | 2021 | | :---------------------------------- | :---------- | :---------- | | GAAP revenue | $54,588 | $22,214 | | GAAP cost of sales | $60,239 | $29,044 | | GAAP gross loss | $(5,651) | $(6,830) | | Depreciation, net of capital-build amortization | $18,779 | $11,986 | | Share-based compensation | $118 | $33 | | Adjusted Cost of Sales | $41,342 | $17,025 | | Adjusted Gross Profit | $13,246 | $5,189 | | Adjusted Gross Margin | 24.3% | 23.4% | Adjusted General and Administrative Expenses Reconciliation (2022 vs. 2021) | (dollars in thousands) | 2022 | 2021 | | :---------------------------------- | :---------- | :---------- | | GAAP general and administrative expenses | $126,713 | $71,086 | | Share-based compensation | $(24,929) | $(10,909) | | Loss on disposal of property and equipment, net of recoveries, and impairment expense | $(8,278) | $(1,311) | | Bad debt (recovery) expense | $18 | $(405) | | Other | $(63) | $(1,849) | | Adjusted General and Administrative Expenses | $93,461 | $56,612 | | Adjusted General and Administrative Expenses as a Percentage of Revenue | 171.2% | 254.8% | Adjusted EBITDA Reconciliation (2022 vs. 2021) | (dollars in thousands) | 2022 | 2021 | | :---------------------------------- | :---------- | :---------- | | GAAP net loss | $(106,240) | $(57,762) | | Depreciation, net of capital-build amortization | $19,103 | $12,122 | | Amortization | $14,900 | $10,177 | | Accretion | $1,915 | $1,602 | | Interest income | $(4,479) | $(69) | | Interest expense | $21 | $0 | | Interest expense, related party | $0 | $1,926 | | Income tax expense | $18 | $0 | | EBITDA | $(74,762)| $(32,004)| | Share-based compensation | $25,048 | $10,942 | | Loss on disposal of property and equipment, net of recoveries, and impairment expense | $8,278 | $1,311 | | Bad debt (recovery) expense | $(18) | $405 | | Other | $63 | $1,849 | | Loss (gain) on investments | $783 | $(554) | | Change in fair value of earnout liability | $(3,481) | $(2,214) | | Change in fair value of warrant liability | $(36,157) | $(31,105) | | Adjusted EBITDA | $(80,246)| $(51,370)|\ | Adjusted EBITDA Margin | (147.0%) | (231.3%) | Liquidity and Capital Resources EVgo's liquidity decreased in 2022, with primary sources including past business combinations and grants, and primary requirements for operating expenses, capital expenditures, and Tax Receivable Agreement payments - As of December 31, 2022, EVgo had $246.5 million in cash, cash equivalents, and restricted cash, and $188.1 million in working capital; this is a decrease from $485.2 million cash and a $459.5 million working capital deficit in 2021[444] - Primary liquidity sources include cash flows from the CRIS Business Combination, revenue streams, government grants, proceeds from Class A common stock sales (including ATM Program), and loans/equity contributions from previous owners[445] - Primary cash requirements are operating expenses, commitments to counterparties/suppliers, and capital expenditures (e.g., EV chargers)[445] - EVgo is obligated to purchase a minimum of 1,000 chargers (2,000 stalls) from Delta over four years, with an option to increase to 1,100, to meet Pilot Infrastructure Agreement requirements and its own needs[446] - Payments under the Tax Receivable Agreement (TRA) are expected to be substantial and will reduce cash available to EVgo or EVgo OpCo, with potential for acceleration and significant impact on liquidity in certain circumstances[447] Cash Flows EVgo experienced a significant net cash decrease in 2022, driven by increased cash used in operating and investing activities, while cash from financing activities substantially declined from the prior year Consolidated Cash Flows (2022 vs. 2021) | (in thousands) | 2022 | 2021 | | :------------- | :---------- | :---------- | | Operating Activities | $(58,794) | $(29,603) | | Investing Activities | $(199,707) | $(87,765) | | Financing Activities | $19,813 | $594,635 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(238,688) | $477,267 | | Cash, cash equivalents and restricted cash, end of period | $246,493 | $485,181 | - Cash used in operating activities increased to $58.8 million in 2022 from $29.6 million in 2021, primarily due to a $23.6 million cash loss from operations and decreases in cash flows from deferred revenue and accounts receivable[449] - Cash used in investing activities more than doubled from $87.8 million in 2021 to $199.7 million in 2022, primarily due to increased purchases of property, equipment, and software[450] - Cash provided by financing activities decreased significantly to $19.8 million in 2022 (from ATM program and capital-build funding) from $594.6 million in 2021 (primarily from the CRIS Business Combination)[451] - Working capital decreased to $188.1 million in 2022 from $459.5 million in 2021, reflecting a $238.7 million decrease in cash, increased accrued liabilities, and increased