EVgo Inc. 10-K

Item 1. Business. Unless otherwise indicated or unless the context otherwise requires, all references to “EVgo” and the “Company” refer to EVgo Inc. and all of its subsidiaries. Overview EVgo owns and operates the United States’ largest public direct current (“DC”) fast charging network by number of locations and the first to be powered by 100% renewable electricity through the use of renewable energy certificates (“RECs”). Founded in 2010 and a pioneer in fast charging, EVgo’s network of charging stations provides electric vehicle (“EV”) charging infrastructure to consumers and businesses. With a rapid rise in electrification expected over the next two decades, EVgo offers essential infrastructure technology and services required to help the world transition to a cleaner, more sustainable future. EVgo has been a leader and innovator in the EV charging space and is well positioned to continue to capitalize on its sustainable first mover and first learner advantages as EV adoption accelerates. More than 130 million people in the U.S. live within a 10-mile drive of one of EVgo’s fast charging stations, and the Company’s network is capable of charging all EV models and charging standards currently available in the U.S. The Company partners with automotive original equipment manufacturers (“OEMs”), national and regional chains of grocery stores, hotels, shopping centers, gas stations, parking lot operators, local governments and independent property owners in order to locate and deploy its EV charging infrastructure. EVgo has a flexible business model that derives value through multiple revenue streams. The foundation of the Company’s business is the development and operation of EV charging sites through which it dispenses electricity to EVs driven by individuals, commercial drivers, and fleet operators. EVgo is prioritizing the build out of ultra-fast chargers, a key market segment that is expected to grow faster than the overall EV charging market. See “— Suppliers and Service Providers — Electricity.” To take advantage of the expected rapid growth in the number of EVs on the road in the United States, the Company is rapidly expanding its network of charging stations, focusing on development of locations with favorable traffic, utilization, and financial return characteristics. The Company’s proprietary technology and analytical tools, along with its extensive commercial partnerships with OEMs, fleets, and governments, provide a strong competitive edge as it selects, designs and develops new charging stations. Furthermore, EVgo’s robust underwriting standards require each station in its portfolio to meet or exceed pre-defined internal rate of return and multiple on invested capital criteria before project approval, which are expected to improve overall results further as EV adoption increases. EVgo’s partnerships and collaboration with a wide range of automotive OEMs, rideshare operators, and other channel partners incentivize and accelerate EV adoption across the U.S. EVgo’s joint efforts with renowned brands across automotive, rideshare, retail, fleet and other industries have powered more than 300 million electric miles on the EVgo network. Total miles delivered is equal to the number of kWh EVgo has dispensed multiplied by the number of miles the average EV receives from a single kWh (“vehicle efficiency”). The weighted average vehicle efficiency from all vehicles compatible with the EVgo network in operation at the end of each year is based on data from Experian and the U.S. Department of Energy. The weighted average vehicle efficiency is applied to the EVgo kWh dispensed in the associated period. EVgo also serves the rapidly growing EV fleet segment. The Company develops and deploys fleet-charging solutions for light-, medium-, and heavy-duty EV fleets, which represent high volume, repeat customers. Reliable and flexible charging is essential to fleet electrification. EVgo is developing, building, operating and servicing charging assets for fleets at their own depot locations, at off-site charging hubs that EVgo has secured, or via EVgo’s expansive public network. In addition, EVgo may integrate proprietary EVgo Optima TM software to connect to a fleet’s logistics platform. To date, fleet contracts have often included guaranteed payment streams in exchange for guaranteed network access, which benefits both EVgo and a fleet operator. Whether EVgo retains ownership of the charging infrastructure itself will depend on the terms and conditions of the commercial arrangement with the particular fleet. 6 Table of Contents To rapidly expand its network, EVgo also offers a white label solution – EVgo eXtend TM – that helps partners invest in and build EV charging stations for their customers. Through EVgo eXtend TM , EVgo leverages its decade-plus track record of operational experience and site design, helping businesses develop charging assets that are serviced through EVgo’s national network. EVgo eXtend TM generates revenue from the site development, engineering and construction of the stations, as well as ongoing revenue through operations, networking, and maintenance of those sites. In addition to the provision of EV charging infrastructure, EVgo is continuing to develop and deploy innovative software-based, value-added services to drivers and partners. These offerings enhance the customer experience across EVgo’s business segments by layering proprietary technology functionality on top of its leading charging network, with the intention of widening EVgo’s competitive moat and providing accretive revenue streams. In 2021, EVgo developed and deployed regional time-of-use per kilowatt-hour pricing across its California public network, expanded the EVgo reservations offering to more metropolitan markets across the U.S., integrated reservations into the newest subscription pricing plan, EVgo Plus, in California, and extended its EVgo Rewards TM driver loyalty program. In December 2021, EVgo launched a new, customizable mobile app to make charging simple for EV drivers, delivering a user experience that makes switching to an EV more inviting. Further strengthening its software capability, in 2021 EVgo acquired PlugShare ® through its acquisition of Recargo. PlugShare ® is the leading global platform for EV drivers to locate and provide information relating to charging stations and provide feedback on their charging experiences, while leveraging tools like Pay With PlugShare ® and EV Trip Planner. Beyond its services to EV drivers, PlugShare ® delivers data to automakers and other customers through the PlugShare® API and manages the world’s largest EV driver research panel through PlugInsights. EVgo grew its advertising reach through PlugShare ® , serving 28 million advertising impressions globally in 2021. Company History EVgo Services was formed in October 2010 as NRG EV Services, LLC, a Delaware limited liability company and wholly owned subsidiary of NRG Energy, Inc. (“NRG”), an integrated power company based in Houston, Texas. EVgo began operations in 2011 as a subsidiary of NRG. On June 17, 2016, NRG sold a majority interest in EVgo to Vision Ridge Partners. On January 16, 2020, a subsidiary of LS Power, a private equity investment vehicle focused on power and energy infrastructure, completed its acquisition of EVgo. The Company was incorporated in Delaware on August 4, 2020 under the name “Climate Change Crisis Real Impact I Acquisition Corporation”. The Company was formed for the purposes of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Initial Business Combination”). On the CRIS Close Date, EVgo Holdco consummated the CRIS Business Combination, with CRIS, Thunder Sub, and the EVgo Parties pursuant to the Business Combination Agreement. Following the CRIS Close Date, the combined company is organized in an “Up-C” structure in which the business of EVgo Holdco and its subsidiaries are held by EVgo OpCo and continue to operate through the subsidiaries of EVgo Holdco, and in which the Company’s only direct assets consist of equity interests in Thunder Sub, which, in turn, holds only EVgo OpCo Units. See “ Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Overview—CRIS Business Combination ” and Note 3 to the audited consolidated financial statements of EVgo included elsewhere in this Annual Report for more information. On the Recargo Acquisition Date, the Company entered into the Recargo Agreement to acquire 100% of the outstanding common stock of Recargo, Inc. On December 29, 2021, Recargo, Inc. converted to Recargo. Recargo operates as a cloud-based data solutions provider in the electric vehicle sector and generates revenue through a variety of services that leverage its user base and its generated data. The Company believes that the acquisition of Recargo will allow it to expand its revenue base and will result in certain synergies within its operations. Market Overview The EV charging market is inextricably linked to the general market for EVs, which has experienced significant recent growth. In 2021, new EV registrations were approximately 475,000, an increase of 93% over 2020, according to the International Energy Agency. Market growth is driven by tailwinds such as increased EV model availability and 7 Table of Contents performance, lower upfront prices for EVs, lower total cost of ownership (“TCO”) as compared to internal combustion engine (“ICE”) vehicles, increased range and availability of chargers, and Federal, state and local incentives and regulations. In response to the growing electrification trend, nearly all major automobile manufacturers have committed to the increased production of EV models, with approximately 40 EV models anticipated to be available in 2022 from nearly 20 manufacturers. Additionally, major automobile manufacturers have set aggressive targets for EV sales, with General Motors (“GM”) announcing aims to phase out ICE vehicle sales by 2035, Ford planning on 40%-50% of its global vehicle volume to be all-electric by 2030, Mercedes-Benz committing to be all electric by 2030, and Volvo committing to be all electric by 2030. According to forecasts from the United States Department of Transportation and Bloomberg New Energy Finance (“BNEF”), approximately 5.8 million EVs are expected to be on American roads by 2025, 25 million EVs by 2030 and 114 million by 2040, which would represent over 40% of all automobiles in the United States. Automobile and battery manufacturers have substantially increased their efforts to offer EVs at a wide range of price points and to develop batteries with higher efficiencies and lower costs. According to Reuters, $515 billion has been invested or committed to EV investment in the next five to ten years by global automobile OEMs. Their investments will expand and put EVs and their associated technologies into mass production, which will underpin optimization of the global EV supply chain. Efforts to date by OEMs have already lowered the upfront costs of EVs, and with further price reductions expected over the next several model years. As measured in terms of TCO, certain classes of EVs are already at or below parity with their ICE counterparts. As overall EV costs decline, more makes and models will reach TCO parity with their ICE equivalents, and the TCO advantage for other types of EVs will expand. In addition to price and TCO declines, widespread adoption of EVs will require consumer confidence in vehicle range, charger availability and increased model choice. Recent EV models, including the Chevrolet Bolt, Ford Mustang Mach-E, Nissan LEAF S Plus, Polestar 2, Hyundai Kona Electric, VW ID.4, Porsche Taycan 4S, Audi E-Tron, Volvo XC40, and Tesla Models 3/Y/S/X, have eclipsed the 200-mile range per battery, a significant improvement on earlier EV models. Researchers and automotive engineers expect that EV ranges will continue to improve as battery technologies advance and costs decline. Beyond increases in range, broadly expanded EV offerings in the sport utility vehicle (“SUV”), crossover utility vehicle, and pickup truck segments over the next three to five years will greatly expand the market appeal and reach of EVs and further accelerate adoption of EVs. These advances are further bolstered by incentives and rebates offered by Federal, state, and local governments to encourage the use of EVs. In November 2021, Congress passed and the President signed the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law. Among other provisions, this legislation included up to $7.5 billion in funding for electric vehicle charging infrastructure through the Department of Transportation. The U.S. Federal government offers a tax credit for qualified plug-in EVs; the minimum credit is $2,500 and the maximum credit is $7,500, depending on vehicle weight and battery capacity. As currently configured in law, these credits begin to phase out when a vehicle manufacturer reaches certain production levels, and such credit has already been completely phased out for EVs manufactured by GM and Tesla. However, legislation under consideration in Congress, if enacted as currently proposed, would eliminate the manufacturer cap and expand the credit both for used and new electric vehicles. States including California, Colorado, Delaware, Massachusetts, New Jersey, and New York also offer various rebates, grants and tax credits to incentivize both EV and electric vehicle supply equipment (“EVSE”) purchases. EVs are also gaining momentum in the Midwest, and soon states like Illinois will also begin to offer vehicle and EVSE incentives. Demand for EVs has also been encouraged by regulatory developments and changes in consumer habits. Several states — including California, Oregon, New Jersey, New York, Maryland and Massachusetts — have adopted or proposed mandates for EVs with an aggregate goal of reaching more than eight million EVs on the road by 2030. Additionally, California has enacted its Clean Miles Standard and Incentive Program (the “Clean Miles Standard”) aiming to reduce greenhouse gas emissions from transportation networking companies (“TNCs”), such as rideshare vehicles, through electrification and other means. In 2021, California also approved the Advanced Clean Truck (“ACT”) rule, a regulation that requires an increasing percentage of medium- and heavy-duty trucks sold in the state to be zero emissions. Washington, New York, New Jersey, and Oregon have also adopted the ACT rule. These regulations, combined with a shift toward car-sharing and mobility as a service offering, will rapidly accelerate EV adoption by fleets in the coming years. EV charging demand is a direct result of the number of EVs operating during a given period, miles traveled by such EVs, and vehicle efficiency of such EVs. The market for fulfilling charging demand is bifurcated between high-powered DC fast and ultra-fast charging and lower powered Level 1 (defined below) and Level 2 (defined below) charging. The 8 Table of Contents demand for different charging types is a function of the EV mix, owner demographics, locational factors, charger availability, pricing and EV use cases (e.g., private ownership, rideshare, delivery and municipally owned fleets, etc.). Lower-powered Level 1 and Level 2 charging is primarily used by EV owners with access to home or workplace charging and currently accounts for the majority of personal EV charging. Level 2 charging is also used by certain fleets that have the ability to charge overnight, have a low daily mileage requirement and return to a centralized location daily. Current DCFC customers are primarily those drivers who need to charge away from home in central business districts, those drivers who do not have access to home or workplace charging, or high-mileage fleets that seek to minimize downtime and maximize miles traveled. Broadening demographics of EV owners, larger battery sizes, larger EVs with higher kilowatt-hour (“kWh”) usage per mile, increased EV penetration in medium- and heavy-duty vehicle applications, and the proliferation of autonomous vehicle fleets will increase demand for DCFC faster than demand for overall EV charging. According to forecasts from BNEF, fast charging is expected to constitute more than 22% of all public EV charging demand by 2030 as compared to less than 10% in 2021. While EVs are more readily available and may benefit from first-mover, supply chain and infrastructure availability advantages relative to other non-ICE vehicles, several alternative vehicle types are also being developed which rely on hydrogen, biodiesel or hybrid powertrains for alternatives to fossil fuels. Sales of such vehicles may reduce the number of drivers requiring EV charging infrastructure. EV Chargers and Standards Working with the charger manufacturing industry, EVgo has specified and deployed a next generation DC fast charging station architecture whereby modular power units are placed under software management and control, allowing power output to be shared dynamically between vehicles that are simultaneously connected to a charger. EVgo has successfully deployed this architecture and demonstrated that this dynamic power sharing technology reduces upfront capital and ongoing operating costs, maximizing return on investment, while increasing operational flexibility and lowering operating risk. This advanced architecture allows EVgo to meet increasing charging requirements of the future, including higher charging speeds, higher power provisioning, dynamic energy and demand management, access prioritization, queuing management and scheduling across different EV models, customer types and use cases. This modular software-defined design maximizes charger throughput, asset utilization and ease of future power augmentation while eliminating single points of failure risks and improving charger reliability and availability. It also maximizes the number of standardized equipment components, helping to accelerate the learning rate benefits and associated cost reductions of charging hardware over time, and improving the ability to offer higher value-added service offerings in the future. As EVs proliferate in the transportation ecosystem, the industry is experiencing an ongoing shift toward the standardization of chargers and the introduction of new industry protocols for interoperability. EV chargers do not come with a “one size fits all” dispenser. EV chargers are typically categorized by their ability to deliver instantaneous amounts of power — as measured in kilowatts (“kW”) — and their charging standards. Current designations based on power level include: ● DCFCs . DCFCs operate between 200 and 1000V DC and supply at least 50kW. EVgo was the first charging company to deploy 350kW chargers in the United States. DCFCs are almost exclusively available in public locations or commercial applications and are capable of adding range of 100 miles in as little as 5 to 10 minutes, where the actual charge rate is capped by the charging capabilities of the particular EV’s charging profile (with lower capability and older EV models requiring 30 minutes or more for equivalent range) or the DCFC’s maximum charging profile. As of December 31, 2021, EVgo’s network contained 1,670 DCFCs at over 850 locations — the largest public DC fast charging network by number of locations and the first EV charging network in the United States powered by 100% renewable electricity, through the use of RECs. See “— Governmental Regulation — Renewable Energy Markets .” ● Level 2 AC Chargers . Level 2 chargers operate at 208V or 240V alternating current (“AC”) and supply between 3.6-19.2 kW. A Level 2 charger will not charge a battery as quickly as a DCFC, providing approximately 25 9 Table of Contents miles of range per hour of charging. Level 2 chargers are often found in homes, workplaces and long dwell time public locations. EVgo currently operates over 1,200 Level 2 AC chargers. ● Level 1 AC Chargers . Level 1 chargers offer the least amount of power, as they operate at 120V AC, supplying between 1.2-1.8 kW. This is consistent with the power level offered through a standard household outlet Such chargers can generally provide approximately 8-10 miles of range per hour. EVgo’s network does not contain any Level 1 chargers. In addition to supporting different charging capabilities, EVs in the United States use different charging standards and connector types. These standards are neither interchangeable nor interoperable (without specialized adaptors) and each utilizes a unique connector. Presently, all EV charging standards deliver energy through cables that connect the EV charging station directly to the vehicle using a port located on the exterior of the vehicle. There are currently three standards in use in the United States — CCS, CHAdeMO and Tesla. ● CCS . The CCS standard is utilized by EVs manufactured by U.S. OEMs (excluding Tesla) and European OEMs. OEMs that produce CCS-enabled vehicles include GM, Ford and BMW. The CCS standard provides for both AC and DC charging. ● CHAdeMO . The CHAdeMO standard has been utilized by EVs manufactured by Japanese OEMs. OEMs producing CHAdeMO-enabled vehicles include Nissan, Honda and Toyota. The CHAdeMO standard is being phased out in North America with Nissan and Toyota announcing that the next generation of their EVs in the United States will utilize the CCS standard. The CHAdeMO standard provides for DC charging. ● Tesla . The Tesla standard is proprietary, utilized solely by vehicles manufactured by Tesla, Inc. and supports AC and DC charging. Tesla sells adaptors for AC and DC charging so that their customers can use non-Tesla charging stations. Tesla’s DC adaptor utilizes the CHAdeMO protocol which limits charging speeds to 50KW only on third-party networks. Tesla has announced support for CCS charging on their proprietary network and has made this commercially available in select locations within Europe, where Tesla already adopted the CCS connector type several years ago as their standard DC fast charging connector. In North America where Tesla still uses their proprietary connector type this change may take longer to implement as it requires physical modification of all super charging stations. Notwithstanding the variety of standards, EVgo’s chargers support all of the above fast charging options. EVgo’s charging stations typically contain both CCS and CHAdeMO cables. Additionally, certain EVgo charging sites offer integrated Tesla charging allowing Tesla drivers to charge without needing a separate adaptor. EVgo plans to expand the number of stations utilizing Tesla Connectors through both retrofits and new development in the near future. Continuing to develop access to seamless, integrated charging for all EV drivers is a core commitment of EVgo. Products and Services Retail Charging The Company sells electricity directly to drivers who access EVgo’s publicly available networked chargers. Various pricing plans exist for customers, and drivers have the choice to charge as members (with monthly fees and reduced per minute or kWh pricing), through a subscription service, or as non-members. Drivers locate the chargers through EVgo’s mobile application, their vehicle’s in-dash navigation system, or third-party databases that license charger-location information from EVgo. EVgo’s chargers are installed in parking spaces owned or leased by commercial or public-entity property owners, landlords and/or tenants (collectively, the “Site Hosts”) that desire to provide charging services at their respective locations. Commercial Site Hosts include retail and grocery stores, offices, medical complexes, airports and convenience stores. EVgo’s offerings are well aligned with the goals of Site Hosts, as many commercial businesses increasingly view charging capabilities as essential to attract tenants, employees, customers and visitors, and achieve sustainability goals. Site Hosts are generally able to obtain these benefits at no cost when partnering with EVgo through the Company’s owner and/or operator model, in which EVgo is responsible for the installation and operation of chargers located on Site Hosts’ properties. In many cases, Site Hosts will earn revenue from license payments in the form of parking 10 Table of Contents space rental fees that EVgo pays in exchange for use of the site. EVgo also offers a white label solution – EVgo eXtend TM – that enables Site Hosts to invest in EV charging stations for their customers that are operated and maintained by EVgo. OEM Charging and Related Services EVgo is a pioneer in OEM charging programs with revenue models to meet a wide variety of OEM objectives related to the availability of charging infrastructure and the provision of charging services for EV drivers. EVgo contracts directly with OEMs to provide charging services to drivers who have purchased or leased such OEMs’ EVs and who access EVgo’s public charger network. Other related services EVgo currently provides to OEMs include co-marketing, data services and digital application services. EVgo’s OEM relationships are a core customer-acquisition channel. Commercial Charging Fleet and Rideshare Public Charging High volume fleet customers, such as TNCs or delivery services, can access charging infrastructure through EVgo’s vast public network. Pricing for charging services is most often negotiated directly with the fleet owner based on the business needs and usage patterns of the fleet. In these arrangements EVgo contracts with, and bills, either the fleet owner directly or an individual fleet driver utilizing EVgo’s chargers. Access to the EVgo public network allows fleet and rideshare operators to support mass adoption of transportation electrification and achieve sustainability goals without needing to directly invest capital in charging infrastructure or incur operating costs associated with charging equipment. ChaaS and Fleet Dedicated Charging In addition to offering access to its public network, EVgo offers dedicated charging solutions to fleets. Given the diverse nature of the fleet segment, with a wide range of vehicle types, duty cycles, geographic footprints, fleet sizes, and capitalization of the fleet operators, EVgo’s ChaaS and dedicated charging solutions are tailored to meet each fleet’s needs without requiring a fleet to directly incur capital expenditures or operating and management costs related to charging EVs. EVgo most typically builds, owns, and operates charging infrastructure for the exclusive use of a specific fleet customer and is currently offering flexible ownership models, including charging as a service (“ChaaS”). EVgo’s dedicated and ChaaS offerings provide a value proposition for fleets who lack the expertise and the capital to procure, install and manage charging infrastructure. EVgo offers a variety of pricing models for dedicated charging solutions, including a mix of volumetric commitments and variable and fixed payments for provision of charging services. Together, EVgo’s dedicated charging solutions and public fleet charging services provide fleets with charging infrastructure options that are robust and flexible as the transition to electrified transportation accelerates. Ancillary Service Offerings In addition to charging services, EVgo offers a variety of software-driven digital, development, and operations services to customers. These offerings currently include customization of digital applications, charging data integration, loyalty programs, access to chargers behind parking lot, or garage, pay gates and pilots microtargeted advertising, and charging reservations. Through eXtend TM , EVgo also offers maintenance services and development and project management services, including EVSE installation, networking and operations. EVgo continues to evaluate and engage in opportunities to use its foundational expertise in charging infrastructure to provide value-added services to the rapidly growing EV ecosystem while delivering shareholder returns. Market Opportunity & Strategy The United States EV market has experienced significant recent growth as the market share of EVs more than doubled in 2021. As adoption accelerates and the market continues to scale, the availability of appropriate charging infrastructure will be critical to enabling consumer and commercial adoption of EVs. Larger (and thus heavier) EV models, such as SUVs and trucks, being made widely available in the coming years, coupled with an increased number of EV fleets, will require a greater number of easily accessible charging outlets. Further, DC charging is expected to grow faster than the overall charging market as EV range increases, battery density grows, and as driver demographics and EV use cases expand. Access to convenient and affordable charging is key to accelerating EV adoption, and EVgo’s mix of public and 11 Table of Contents dedicated high-powered DCFC and low-powered Level 2 offerings positions the Company to take advantage of broadening electrification trends. EVgo is differentiated as an operator of charging infrastructure focused on high traffic, high density urban, suburban and exurban areas. The Company has an extensive track record in optimized site selection, site development, planning, engineering, construction and operation. In addition, EVgo’s robust underwriting standards and strong balance sheet underpin disciplined capital allocation. Experience as an asset owner and operator also provides the essential ingredients for being a partner of first resort in provision of white label services, creating increased optionality to provide charging services to emerging segments. The EVgo team has developed expertise and business processes for developing and operating a comprehensive, highly reliable charging network and in selecting and developing quality sites for chargers; managing multi-pronged build projects through engineering, permitting, construction, and commissioning; and operating and maintaining a distributed network of DCFCs across the country. The core elements of this ongoing strategy include: ● Identifying Optimal Charging Sites . EVgo utilizes proprietary business intelligence tools to leverage complex financial analytics and proprietary data sets to identify the optimal locations to install charging stations. These tools allow for effective network planning by optimizing site selection, charger configurations, regulatory incentive capture and network design, while taking into account current and projected EV penetration trends and owner demographics, local availability of charging infrastructure, traffic patterns, fleet partner electrification, input from OEMs, government policies and specific site level economic factors. ● Charging Sites Development, Engineering and Construction. EVgo is able to develop charging sites from initial selection through to energization which includes Site Host partner onboarding, permitting, hardware equipment specification, testing and validation, station configuration design, incentive grant capture and management, construction management and oversight, utility management and commissioning. ● Charging Sites Operation. EVgo has developed experience and expertise as well as a track record in the industry through the longtime ownership and operation of a network of charging sites. EVgo remotely monitors sites 24/7, manages preventative and corrective maintenance, and operates a 24/7 call center for customers. Leveraging years of operational data, EVgo anticipates the needs of transportation electrification to improve operational effectiveness. ● Technology-Enabled Products and Services . EVgo invests meaningfully to enhance products and services to maintain a leadership position as a developer, owner and operator of networked charging infrastructure. Continued research and development activities focused on hardware design, station architecture and EVgo’s technology stack and software applications widen EVgo’s competitive moat and offer the potential for high margin accretive revenue streams. Whether it’s an innovative mobile app for EV drivers, a customized portal that provides OEM partners with EVgo network visibility, or development of sophisticated diagnostics delivered to vendors in real time so that equipment functionality can be enhanced, these tech-enabled services allow further strengthening of EVgo’s customer relationships. ● New Business Lines. EVgo intends to continue investing in new and emerging revenue lines that build on the Company’s foundation of being the owner and operator of the United States’ largest public DC fast charging network by number of locations and strengthen its platform and existing offerings, particularly in areas that offer significant potential for sustainable revenue and strong margins. Fleet contracts, partnerships on highway corridors, and growth in advertising represent three significant opportunities. ● Disciplined Capital Allocation . EVgo’s capital investments undergo rigorous financial analysis and consideration by the Company’s internal investment committee. Investments are analyzed using several parameters and require each station portfolio to meet or exceed pre-defined internal rate of return and multiple on invested capital criteria in expected and downside cases before approval. Robust underwriting standards reviewed by management and the Board of Directors quarterly underpin such disciplined capital allocation. 12 Table of Contents ● Maximizing Value for Different Stakeholders . EVgo is committed to providing a best-in-class customer experience for all EV drivers, Site Hosts, and utility, OEM and government partners. Each of EVgo’s products is crafted with this in mind. As EVgo’s geographic footprint and customer reach expand, the services that come with charging at EVgo will also expand. ● Public Policy Engagement . EVgo is continuously engaged with Federal, state and local regulators, utilities, legislatures and other stakeholders to unlock new markets, shape funding opportunities, reduce electricity rates, implement streamlined EV charging tariffs and interconnection processes, and promote competitive ownership of EVSE. As EVs become readily available nationwide and as Federal infrastructure funding rolls out, EVgo will expand its engagement with state and local officials, increase its public policy outreach and continue its advocacy for policies that advance electric mobility. ● Pursuing Strategic Acquisitions . EVgo will continue to explore and pursue opportunities to expand its platform and reach, while maximizing shareholder value. Competition The charging infrastructure sector is evolving as the EV market grows and expands to serve new drivers – and it is likely to become increasingly competitive. Key parts of the charging value chain include charging equipment manufacture and sales, charging network operation and ownership, and charging software development. The EV charging companies currently operating in the U.S. – like Blink, ChargePoint, Electrify America, Shell Recharge Solutions (formerly Greenlots), Volta, Tritium, IoTecha, Rhombus, and a few electric utilities – are involved with various parts of this value chain. But given the relatively early stage of electrification as a sector, the business models being pursued by each company are evolving. In general, charging sector incumbents may expand their product offerings and sales strategies, and new competitors may enter the market. As the charging sector continues to evolve, there are a number of players that are or could emerge as EVgo’s competition. As a leading builder, owner and operator of a public fast charging network, EVgo’s competitors include Electrify America, Blink, Volta, and ChargePoint, as well as the limited number of utilities granted permission by their regulators to own charging assets. As a provider of integrated fleet solutions, EVgo’s competitors include Shell Recharge Solutions, InCharge and ChargePoint, but utilities could emerge as a competitive force in the future, as well as other pure play charging companies aiming to capitalize on the fleet electrification trend. The principal competitive factors in the industry include charger count, locations and accessibility; DCFC network availability and reliability, scale and local density; charger connectivity to EVs and ability to charge all standards; speed of charging relative to expected vehicle dwell times at the location; software-enabled services and overall customer experience; operator brand, track record and reputation; access to equipment vendors and service providers; and access to public policy support and pricing. Barriers to entry in the EV charging market may erode as a result of government intervention and various support programs, leading to more competitors with a variety of profitability objectives. EVgo has a competitive advantage in delivering charging services driven by network scale, network design, experience developing and operating DCFC infrastructure, OEM partnerships, fleet and rideshare partnerships, brand equity, longstanding reputation in the industry, differentiated station design and software enabled service offerings, and network effects driven by higher utilization on the EVgo network as compared to competitors. It should be noted that competition arising from use of other types of alternative fuel vehicles, plug-in hybrid electric vehicles and high fuel economy gasoline and diesel-powered vehicles could inhibit growth in the EV sector. 13 Table of Contents Suppliers and Service Providers Charging Equipment and Related Services EVgo relies on third-party vendors for design, testing and manufacturing of charging equipment. At this stage of the industry, equipment is unique to each supplier with respect to components and aftermarket maintenance and warranty services. As such, equipment and services are currently singularly sourced from each supplier. For the year ended December 31, 2021, Delta and Marubeni provided 37.3% of EVgo’s total charging equipment and services. For the year ended December 31, 2020, ABB, BTC Power, Marubeni and Nationwide provided 84.0% of EVgo’s total charging equipment and services. EVgo has invested in and maintains long-term relationships with suppliers and service providers. EVgo designs stations and specifies EV chargers in-house and outsources production to an assortment of manufacturers. Based on a rigorous qualification and testing process, the Company has established commercial relationships with multiple EV charger manufacturers including Signet, Delta, BTC, ABB, IoTecha and LiteOn. EVgo typically appoints and manages specialized electrical contractors to perform station construction and perform maintenance activities. Additionally, EVgo’s charging management software platform was developed and is operated by Driivz. Electricity For approximately 55% of EVgo’s charging sites, electricity is purchased for charging stations directly from local utilities as a commercial and industrial customer, with these sites representing approximately 63% of total GWh throughput. Each site qualifies for a certain utility tariff based primarily on maximum instantaneous electric usage measured over a historic period. A typical electricity tariff for a site consists of (i) a fixed charge, generally based on the number of meters on site, (ii) an energy charge based on kWh used, which may vary depending on time of use (including seasons and peak hours), (iii) a demand charge, or cost charged per kW during applicable calculation period, which is often monthly, but which may also vary depending on time of use, and (iv) any applicable state and utility taxes. The remainder of EVgo’s charging sites obtain electricity through the Site Host. EVgo reimburses the Site Host for the cost of the electricity at a negotiated rate, subject to the terms of each Site Host agreement. The negotiated rate varies based on the Site Host’s electricity tariff, the size of the charging site and other financial incentives provided to the Site Host. Customers, Partnerships and Strategic Relationships EVgo has established partnerships and strategic relationships with key OEMs, Site Hosts and fleet operators, including GM and Nissan which are discussed further below. These relationships allow EVgo to access new customers and build brand awareness through co-marketing. EVgo may also benefit from promotional programs sponsored by OEMs. In some cases, OEM partners have agreed to provide one-time or ongoing payments related to the build out of EVgo’s charger network. For example, GM has agreed to provide quarterly payments to EVgo as additional fast chargers are added to the network pursuant to a contractual arrangement between GM and EVgo. In all cases, EVgo retains 100% ownership of the chargers built under these OEM programs. EVgo has established, invested in and maintained long-term relationships with Site Hosts with national and regional multi-site portfolios of commercial and retail properties. EVgo’s Site Hosts span a wide array of industries and locations, including airports, automobile dealers, healthcare/medical facilities, hotels, mixed-use facilities, municipal locations, parks and recreation areas, parking lots, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs and workplace locations. EVgo executes numerous master agreements with Site Hosts that enable the conversion of prospect sites into develop-able locations by standardizing terms and conditions for site control. EVgo’s ownership model is attractive to Site Host partners as it allows them to offer an EV charging amenity to their customers without needing to incur upfront capital expenditures or ongoing operating costs while generating rent revenue from EVgo. The benefits offered to Site Hosts through EVgo’s business model continue to provide EVgo access to the highest quality property owners, grocery store chains, parking garages, airports and convenience stores. The Company had accounts receivable with two customers that comprised 32.4% and 66.0% of the Company’s total accounts receivable as of December 31, 2021 and 2020, respectively. For the years ended December 31, 2021 and 2020, one customer represented 10.5% and two customers represented 23.8% of total revenue. As EVgo and the EV industry 14 Table of Contents continue to grow, EVgo expects revenues will be generated from a larger and an increasingly diverse group of customers and commercial partners. In the ordinary course of business, EVgo engages in active discussions and renegotiations with EVgo’s commercial partners in respect to the solutions it provides and the terms of its agreements, including fees. Most of EVgo’s contracts with EVgo’s commercial partners have multi-year terms, and some have rights to terminate prior to the end of the term. The loss of any of EVgo’s largest commercial partners or the renegotiation of any of EVgo’s largest contracts with its commercial partners could adversely affect EVgo’s results of operations. General Motors On July 20, 2020, EVgo entered into a five-year contract with GM (the “GM Agreement”) to build 2,750 fast chargers that EVgo will own and operate as part of the Company’s public network. On November 2, 2021, EVgo entered into an amendment agreement with GM in order to adjust stall installation targets and expand the overall number of chargers to be installed to 3,250 fast chargers. EVgo believes this agreement will serve to accelerate the Company’s development plans and enhance customer acquisition and brand equity among retail drivers. Pursuant to the GM Agreement, EVgo is required to meet certain quarterly milestones measured by the number of charger stalls installed, and GM is required to make certain payments based on chargers installed. Under the GM Agreement, EVgo is required to install a total of 3,250 chargers by December 31, 2025, 72% of which are required to be installed by December 31, 2023. Meeting these milestones will require additional funds beyond the amounts committed by GM, and EVgo may face delays in construction, commission or aspects of installation of the chargers the Company is obligated to develop. EVgo is also required to maintain network availability (i.e., the percentage of time a charger is operational and available on the network) of at least 93%. In addition to the capital build program, EVgo committed to providing a certain number of new GM EV cars with an EVgo charging credit and limited time access to other EVgo services at a discounted rate. The GM Agreement is subject to early termination in certain circumstances, including in the event EVgo fails to meet the quarterly charger-installation milestones or maintain the specified level of network availability. If GM opts to terminate the agreement, EVgo may not be entitled to receive continued payments from GM and instead may be required to pay liquidated damages to GM. In the event EVgo fails to meet a charger-installation milestone or maintain the required network availability in a calendar quarter, GM has the right to provide EVgo with a notice of such deficiency within 30 days of the end of the quarter. If the same deficiency still exists at the end of the quarter immediately following the quarter for which a deficiency notification was delivered, GM may immediately terminate the agreement and seek pre-agreed liquidated damages of up to $15.0 million. As of March 15, 2022, there were approximately 2,500 stalls that had been approved by GM, of which approximately 2,000 stalls were already in the active engineering and construction development pipeline. As of March 15, 2022, EVgo had 85 stalls left to install in order to meet its charger-installation milestone for the quarter ending March 31, 2022. EVgo may not meet the charger-installation milestones under the GM Agreement in the future, particularly as a consequence of delays in permitting, commissioning and utility interconnection resulting from COVID-19 and supply chain disruptions in business operations across the utility, engineering and permitting chain, as well as industry and regulatory adaptation to the requirements of high-powered charger installation, including slower than expected third-party approvals between utilities and landowners of sites where charger stations will be located. Nissan EVgo has executed two program services agreements with Nissan. These agreements provide for a capital build program, joint marketing activities and charging credit programs for purchasers or lessees of Nissan EVs. Under the joint-marketing activities provisions of the first agreement (the “Nissan Agreement”), EVgo was to spend a specified amount annually on joint-marketing activities that were mutually agreed-upon with Nissan. Credits for charging were allocated annually to purchasers or lessees of Nissan EVs and allowed each participant to charge their vehicle for 12 to 24 months at no charge to the participant, up to the amount of the charging credit allocated to such participant. In the event a participant did not use the entire amount of its charging credit within 12 or 24 months, a portion of the remaining dollar value of such credit rolled over to subsequent periods and a portion was retained by the Company. 15 Table of Contents Under the terms of the Nissan Agreement, purchasers or lessees of Nissan LEAF electric vehicles in certain markets could receive charging services at the Company’s station or a participating third-party charging station. Pursuant to the Nissan Agreement, EVgo was required to support, maintain and make available at least 850 chargers through July 7, 2021. The Company fulfilled all build, support and maintenance obligations under the Nissan Agreement. On June 13, 2019, EVgo entered into a second agreement with Nissan (the “Nissan 2.0 Agreement”). The Nissan 2.0 Agreement includes a capital-build program requiring the Company to install, operate and maintain public, high-power dual-standard chargers in specified markets pursuant to a schedule that outlines the build timelines for the chargers to be constructed (the “Build Schedule”). Under the terms of the Nissan 2.0 Agreement, the Build Schedule is negotiated at the beginning of each year. All chargers for each program year must be installed by August 31. In 2021, EVgo worked with Nissan to revise the annual Build Schedule to extend the milestone dates. Furthermore, Nissan waived penalties for installation delays in program year one. EVgo’s ability to meet Build Schedule obligations may be impacted by delays in permitting, slower than expected third-party approvals of certain site acquisitions, delays in utility interconnection resulting from industry adaptation to the requirements of high-powered charger installation, as well as supply chain issues. Going forward, EVgo is uncertain if these, or other potential issues in the procurement, installation, or energization of DCFC, will be resolved in a timely fashion. At this time, EVgo’s ability to meet future Build Schedule obligations may continue to be impacted by circumstances similar to those experienced during the first half of 2021, or other potential issues including, but not limited to, equipment design and procurement, timing of third-party funding agreements, and the siting, permitting, construction, energizing of DCFC or delays in releasing public grant funding. Nissan has the right to terminate the Nissan 2.0 Agreement, without penalty or obligation of any kind, upon 30 days’ written notice if it is unable to secure funding to make payments required under the Nissan 2.0 Agreement. Nissan receives budget approvals annually from Nissan Motor Company Limited. As of December 31, 2021, Nissan has fulfilled its annual payment obligations under the Nissan 2.0 Agreement. If Nissan terminates the Nissan 2.0 Agreement due to a lack of funding, EVgo will still be required to perform the following: (i) meet charger installation milestones through the date of termination; (ii) provide an aggregate of $1.6 million in joint marketing activities and (iii) provide $4.8 million worth of charging credits that shall continue to be administered. Pursuant to the Nissan 2.0 Agreement, as modified by the aforementioned extension and other amendments, EVgo is required to install an aggregate of 210 chargers by February 29, 2024 at a number of sites to be mutually agreed upon during each Build Schedule. Pursuant to the current Build Schedule, EVgo is required to install 58 chargers by August 31, 2022. If the Company fails to meet future Build Schedule obligations, Nissan may invoke a penalty of up to $35,000 per delayed site beyond a designated cure period, up to 61 sites, which would result in adjustment to the consideration received for EVgo’s performance obligations under the Nissan 2.0 Agreement. Intellectual Property EVgo protects intellectual property and proprietary rights through patent, trademark, copyrights, trade secret and unfair competition laws, augmented by confidentiality protocols. EVgo undertakes actions as necessary to ensure that its proprietary rights are protected, while at the same time respecting the intellectual property rights of other persons. As of December 31, 2021, EVgo held 16 patents and had 14 additional patent applications both in the United States and abroad. EVgo continues to regularly assess opportunities for seeking patent protection for those aspects of EVgo’s technology, designs and methodologies that provide a meaningful competitive advantage to the Company. Governmental Regulation State, regional and local regulations for installing EV charging stations vary from jurisdiction to jurisdiction and may include permitting requirements, inspection requirements, licensing of contractors and certifications. On December 16, 2019, California adopted amendments to the state’s EVSE specifications that prohibit, or will prohibit, public-charging operators from billing customers by the minute within the state. The prohibition on per-minute billing currently applies to all new Level 2 chargers installed or replaced on or after January 1, 2021 and will apply to new 16 Table of Contents DCFCs installed or replaced on or after January 1, 2023. Chargers installed before 2021 can continue time-based billing until 2031 (for Level 2 chargers) or 2033 (for DCFCs). In 2021, EVgo transitioned to kWh-based pricing at its California DCFCs. California, Colorado, Florida, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, New York, Oregon, Pennsylvania, Utah, Virginia, Washington and the District of Columbia have determined that companies that sell EV charging services to the public will not be regulated as utilities. While these individual state determinations are not binding on any other regulator or jurisdiction, they demonstrate a trend in the way states view the nascent EV charging industry. Other jurisdictions are in the process of adopting such reforms. The determination not to regulate the Company as a utility generally provides the Company with greater flexibility to set rates and frees the Company from being subject to more burdensome regulatory requirements. Grants and Incentives EVgo continuously pursues public grants, subsidies and incentives to reduce capital expenditures. EVgo has dedicated, and plans to continue to dedicate, a variety of internal and external resources to monitor, submit for, and utilize available grant, subsidy and incentive funding for the development of DCFCs on a state, local and national level. EVgo generally informs network expansion and local build plans based on expected timing for and availability of funding of this type. EVgo has received grants from the California Energy Commission, Bay Area Air Quality Management District, Florida Department of Environmental Protection, Pennsylvania Department of Environmental Protection, Colorado Energy Office, Maryland Energy Administration, North Carolina Department of Environmental Quality and the Virginia Department of Environmental Quality. As an example of these grants, on August 9, 2018, the Virginia Department of Environmental Quality selected EVgo as the recipient of an approximately $14.0 million award to develop a statewide public charging network. Under the terms of the award, the Virginia network will be developed over three one-year investment cycles, with options to extend. As of December 31, 2021, EVgo had approximately 70 DC fast chargers left to be installed under the Virginia Department of Environmental Quality award. EVgo exercised the option to extend the investment cycle by two years. EVgo intends to continue to vigorously seek additional grants, rebates, subsidies and incentives as an effective avenue to reduce its capital investment in the promotion, purchase and installation of charging stations where applicable. Government Regulations to Enhance EV Adoption The regulations mandated by the National Highway Transit Safety Administration (“NHTSA’s”) Corporate Average Fuel Economy (“CAFE”) standards set the average new vehicle fuel economy, as weighted by sales, that a manufacturer’s fleet must achieve. These standards have been established through Model Year 2026 for light-duty vehicles; however, in September 2021, the Biden Administration proposed to significantly increase these standards for model years 2024-2026, and EVgo expects the administration to set standards for future model years as well. Although EVgo is not a car manufacturer, and thus not directly subject to the CAFE standards, such standards may still indirectly affect EVgo’s business. The adoption of more stringent Federal standards may create further incentives for vehicle manufacturers to increase their EV offerings, which would likely result in increased demand for charging services. Additionally, several states, such as California, Massachusetts, and New York, have adopted or are considering adopting bans on the sale of internal combustion engine vehicles by 2035. Waste Handling and Disposal EVgo is subject to laws and regulations regarding the handling and disposal of hazardous substances and solid wastes, including electronic wastes and batteries. These laws generally regulate the generation, storage, treatment, transportation, and disposal of solid and hazardous waste and may impose strict, joint and several liability for the investigation and remediation of areas where hazardous substances may have been released or disposed. For instance, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), also known as the superfund law, in the United States and comparable state laws impose liability, without regard to fault or the legality of the original conduct, on certain classes of persons that contributed to the release of a hazardous substance into the environment. These persons include current and prior owners or operators of the site where the release occurred as well as companies that disposed or arranged for the disposal of hazardous substances found at the site. Under CERCLA, these persons may be subject to joint and 17 Table of Contents several strict liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. CERCLA also authorizes the Environmental Protection Agency (the “EPA”) and, in some instances, third parties to act in response to threats to the public health or the environment and to seek to recover from the responsible classes of persons the costs they incur. The Company may also generate or dispose of solid wastes, which may include hazardous wastes that are subject to the requirements of the Resource Conservation and Recovery Act (“RCRA”), and comparable state statutes. While RCRA regulates both solid and hazardous wastes, it imposes strict requirements on the generation, storage, treatment, transportation and disposal of hazardous wastes. Certain components of EVgo’s charging stations may be excluded from RCRA’s hazardous waste regulations, provided certain requirements are met. However, if these components do not meet all of the established requirements for the exclusion, or if the requirements for the exclusion change, the Company may be required to treat such products as hazardous waste, which are subject to more rigorous and costly disposal requirements. Any such changes in the laws and regulations, or in EVgo’s ability to qualify the materials the Company uses for exclusions under such laws and regulations, could adversely affect EVgo’s operating expenses. Renewable Energy Markets As part of EVgo’s business strategy, the Company markets the electricity provided from EVgo’s charging stations as 100% renewable. Any claims EVgo makes to consumers about EVgo’s use of renewable energy are subject to regulation by the Federal Trade Commission (“FTC”). The FTC Green Guides require all non-renewable energy use to be matched with RECs in order to make renewable energy claims and may also require certain statements regarding the sources of renewable energy and related RECs. Failure to comply with such regulations can result in substantial monetary penalties or otherwise impact EVgo’s results of operations. Therefore, the Company purchases certified RECs in order to qualify the electricity the Company distributes through charging stations as renewable energy and will continue to purchase certified RECs in the future to substantiate claims that EVgo’s charging stations are powered by 100% renewable energy. Additionally, as part of EVgo’s business model, the Company projects the number of RECs needed and purchases such RECs to meet this projection. Failure to accurately project EVgo’s REC needs may result in the purchasing of RECs on the spot market in order to maintain compliance with applicable regulations. If material, this may adversely affect EVgo’s business and financial condition. LCFS Credits The Company derives a portion of EVgo’s revenue from selling regulatory credits earned for participating in Low Carbon Fuel Standard (“LCFS”) programs in markets where such programs are active — currently in California and Oregon. EVgo earns credits for the sale of energy and, in certain cases, the installation of DCFC infrastructure under California’s Fast Charging Infrastructure (“FCI”) program. EVgo sells credits earned through these programs to entities obligated to purchase the credits for compliance or through exchanges. EVgo actively seeks to maximize the number of credits generated per kWh of energy sold by sourcing renewable electricity. EVgo’s management is actively monitoring proposed LCFS programs in other states, such as Massachusetts, New York, Colorado, Washington and New Mexico as potential future revenue streams. The availability of such credits depends on continued governmental support for these programs and regulatory frameworks that make it possible for EVgo to participate in these credit markets. ESG Matters The Company views ESG as integral to EVgo’s business strategy. EVgo strives to protect the environment and help tackle climate change, accelerating the transition to clean energy. EVgo is also committed to the promotion of sustainable communities and the promotion of equal access. Excellence in ESG provides a benefit to EVgo’s stakeholders and the communities in which EVgo operates. Employees As of March 15, 2022, EVgo had 225 employees, including 219 regular full-time employees. None of EVgo’s employees are represented by a labor union or covered by a collective bargaining agreement. The Company has never experienced a work stoppage and believes in maintaining positive relationships with EVgo’s employees. 18 Table of Contents