What changed in this filing

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Item 1A. Risk Factors

2022-11-04 compared with 2022-08-10 · 61 added, 34 removed, 6 unchanged (94% of the section changed)

Investing in EVgo’s securities involves risks.

If any of these risks actually occur, it may materially harm EVgo’s business, financial condition, liquidity and results of operations.

As a result, the market price of EVgo’s securities could decline, and you could lose all or part of your investment.

Additionally, the risks and uncertainties described in this Quarterly Report are not the only risks and uncertainties that EVgo faces.

Additional risks and uncertainties not presently known to the Company or that EVgo currently believes to be immaterial may become material and adversely affect EVgo’s business.

Factors that could cause EVgo’s actual results to differ materially from those in this Quarterly Report include the risk factors described in the Annual Report.

New climate disclosure rules proposed by the SEC may increase EVgo’s costs of compliance and adversely impact EVgo’s business.

On March 21, 2022, the SEC proposed new rules relating to the disclosure of a range of climate-related risks.

Public comments were due by June 17, 2022 and the SEC is currently finalizing the new rules and is expected to be effective in December 2022.

At this time, EVgo cannot predict the costs of implementation or any potential adverse impacts resulting from the rule.

To the extent this rule is finalized as proposed, EVgo could incur increased costs relating to the assessment and disclosure of climate-related risks and costs related to greenhouse gas emissions accounting and disclosures regarding EVgo’s use of renewable energy certificates.

EVgo may also face increased litigation risks related to disclosures made pursuant to the rule if finalized as proposed.

EVgo will be required to install a substantial number of charger stalls under EVgo’s agreement with Pilot Company and GM.

If EVgo does not meet EVgo’s obligations under this agreement, EVgo may not be entitled to payments from Pilot Company and may be required to pay liquidated damages, which may be significant.

Pursuant to the Pilot Infrastructure Agreement, EVgo is required to meet certain milestones over two biennial periods measured by the number of chargers installed and charger sites serviced, and Pilot Company is required to make certain payments each month based on the progress of construction at each charger site and for each charger procured.

Under the Pilot Infrastructure Agreement, EVgo is required to install approximately 500 chargers at 300 charger sites during the first two-year period and will be required to install approximately 500 chargers at an additional 200 to 250 charger sites during the second two-year period.

EVgo may not be able to meet the charger installation milestones and may be subject to liquidated damages, modifications to the Pilot Infrastructure Agreement or termination of the Pilot Infrastructure Agreement.

Subject to certain excusable events, if EVgo is unable to meet its charger installation obligations in either of the two biennial periods, Pilot Company may be entitled to liquidated damages.

Furthermore, depending on the length of the delay, Pilot Company may remove the charger site from the portfolio without designating a replacement charger site.

The Pilot Infrastructure Agreement is subject to early termination for several reasons including:

(a) at Pilot Company’s election after 1,000 charging stalls (500 chargers) have been completed, subject to certain payments to EVgo, (b) the inability of EVgo to secure certain charger types in specified circumstances and (c) a material increase in the price of chargers due to a change in law.

EVgo is committed to purchasing a large amount of chargers under the Delta Charger Supply Agreement and Purchase Order requiring significant capital expenditures, some of which may not be immediately offset by payment by EVgo’s counterparty under the Pilot Infrastructure Agreement.

EVgo entered into the Delta Charger Supply Agreement and Purchase Order in order to meet the charger requirements of the Pilot Infrastructure Agreement.

Pursuant to the Delta Charger Supply Agreement and Purchase Order, EVgo will purchase a minimum of 1,000 chargers (which will enable the construction of 2,000 stalls) from Delta over a period of four years with the option, at EVgo’s election, to increase the number of chargers purchased to 1,100.

Under the terms of the Purchase Order, EVgo is to receive delivery of the 600 chargers in the 11 months following July 12, 2022 and is required to make full payment on such chargers within 60 days of receipt.

If the counterparty under the Pilot Infrastructure Agreement does not meet its obligation to pay for chargers or the Pilot Infrastructure Agreement is otherwise terminated, EVgo’s cash flows may be negatively impacted by its obligation to continue to purchase chargers from Delta under the Purchase Order.

EVgo depends on a limited number of vendors for charging equipment, including Delta.

The inability of Delta to fulfill its requirements under the Delta Charger Supply Agreement and Purchase Order will require EVgo to find an alternative supplier in order to meet its commitments under the Pilot Infrastructure Agreement which may not be available or may be at significantly higher cost.

Continuing or worsening inflationary issues and associated changes in monetary policy may result in increases to the cost of our charging equipment, other goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise.

inflation rate has been steadily increasing since 2021 and into 2022.

These inflationary pressures may result in increases to the costs of our charging equipment and personnel, which would in turn cause our capital expenditures and operating costs to rise.

Sustained levels of high inflation have likewise caused the U.S.

Federal Reserve and other central banks to increase interest rates, which could have the effects of raising the cost of capital and depressing economic growth, either of which—or the combination thereof—could hurt the financial and operating results of our business.

In the course of conducting its business operations, EVgo is exposed to a variety of risks, any of which have affected or could materially adversely affect EVgo’s business, financial condition, and results of operations.

The market price of EVgo’s securities could decline, possibly significantly or permanently, if one or more of these risks and uncertainties occurs.

Before you make a decision to buy EVgo’s securities, in addition to the risks and uncertainties discussed above under “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the specific risk factors set forth in the “Risk Factors” section in the Annual Report and in EVgo’s quarterly reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, as supplemented by the risk factors described below.

The EV market currently benefits from the availability of rebates, tax credits and other financial incentives from governments, utilities and others to offset the purchase or operating cost of EVs and EV charging stations.

The reduction, modification or elimination of such benefits could adversely affect EVgo’s financial results.

federal government and some state and local governments provide incentives to end users and purchasers of EVs and EV charging stations in the form of rebates, tax credits, and other financial incentives, such as payments for regulatory credits.

The EV market relies on these governmental rebates, tax credits, and other financial incentives to significantly lower the effective price of EVs and EV charging stations.

However, these incentives may expire on a particular date, end when the allocated funding is exhausted, or be reduced or terminated as a matter of regulatory or legislative policy.

In particular, EVgo has historically benefitted from the availability of federal tax credits under Section 30C of the Code, which effectively subsidized the cost of placing in service EVgo’s charging stations.

The Inflation Reduction Act revised the credits under Section 30C of the Code to (i) retroactively extend the expiration of the credit as of December 31, 2021 (with such credit continuing to be capped at $30,000 per location for EV charging stations placed in service before January 1, 2023) until January 1, 2033, (ii) revised the credit structure, availability, and requirements for EV charging stations placed in service after December 31, 2022, and (iii) introduced the concept of transferability of tax credits, providing an additional option to monetize such credits.

As part of the revised credit structure and requirements for EV charging stations placed in service after December 31, 2022, the available Section 30C credit was expanded such that it is capped at $100,000 per item;

however, in order to be eligible for such tax credit, EV charging stations must be installed in rural or low-income census tracts.

Additionally, in order to receive the full tax credit, labor for EV charging station construction and maintenance must meet prevailing wage and apprenticeship requirements unless an exception applies.

There can be no assurance that the EV charging stations placed in service by EVgo will meet the revised requirements for the Section 30C credits and complying with such requirements could increase EVgo’s labor and other costs.

Any reduction in rebates, tax credits or other financial incentives available to EVs or EV charging stations, could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

In addition, there is no assurance EVgo will have the necessary tax attributes to utilize any such credits that are available and may not be able to monetize such credits on favorable terms.

Further, certain of EVgo OpCo’s ownership may limit the available tax credit that can be monetized or utilized.

New tariffs and policies that could incentivize overbuilding of infrastructure may also have a negative impact on the economics of EVgo’s stations.

Furthermore, new tariffs and policy incentives could be put in place by the Biden Administration that favor equipment manufactured by or assembled at American factories, which may put EVgo’s fast charging equipment vendors at a competitive disadvantage, including by increasing the cost or delaying the availability of charging equipment, by challenging or eliminating EVgo’s ability to apply or qualify for grants and other government incentives, or by disqualifying the Company from the ability to compete for certain charging infrastructure buildout solicitations and programs, including those initiated by federal government agencies.

Moreover, a variety of incentives and rebates offered by the U.S.

federal government as well as state and local governments in order to encourage the use of EVs may be limited or reduced.

In particular, the U.S.

federal government offers a tax credit, the maximum amount of which is $7,500, for qualified new plug-in EVs.

The Inflation Reduction Act modified the tax credit for new plug-in EVs and added new tax credits for used and commercial EVs.

The Inflation Reduction Act removed the phase-out of tax credits for new plug-in EVs with respect to vehicle manufacturers that reached certain production levels beginning in 2023.

However, the tax credit is subject to additional requirements and limitations, such as certain adjusted gross income limits for consumers claiming the credit, domestic content requirements for critical minerals and batteries, and a requirement for final assembly to occur in North America.

Such additional requirements and limitations for such tax credits may reduce incentives available to consumers to encourage the adoption of EVs, which could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

Changes to applicable U.S.

tax laws and regulations or exposure to additional income tax liabilities could affect EVgo’s and EVgo OpCo’s business and future profitability.

EVgo has no material assets other than its indirect interest in EVgo OpCo, which holds, directly or indirectly, all of the operating assets of the EVgo business.

EVgo OpCo generally will not be subject to U.S.

federal income tax but may be subject to certain U.S.

state and local and non-U.S.

EVgo is a U.S.

corporation that will be subject to U.S.

corporate income tax on EVgo’s worldwide operations, including EVgo’s share of income of EVgo OpCo.

Moreover, EVgo’s operations and customers are located in the United States.

As a result, EVgo and EVgo OpCo are subject to various U.S.

federal, state and local taxes, and EVgo’s future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

● changes in the valuation of EVgo’s deferred tax assets and liabilities;

● expected timing and amount of the release of any tax valuation allowances;

● tax effects of share-based compensation;

● the availability of tax deductions, credits, exemptions, refunds, and other benefits to reduce tax liabilities;

● changes in tax laws, regulations or interpretations thereof.

For example, the recently enacted Inflation Reduction Act extends and expands certain tax credits for EVs and EV charging infrastructure.

As part of these changes, EV charging infrastructure and purchasers of EVs will be subject to additional requirements and/or limitations which may reduce the credits for which EVgo and EV consumers may be eligible and may affect the adoption of EVs and impact the demand for EV charging stations.

The exact impact of these changes is not fully known and may, in some circumstances, depend on Treasury guidance regarding the interpretation and implementation of the Inflation Reduction Act that has not yet been issued.

These and any other changes to government incentives that impose additional restrictions could increase costs, limit EVgo’s ability to utilize tax benefits, reduce its competitiveness, and/or adversely impact EVgo’s growth, which could have a material adverse effect on EVgo’s business, financial condition, and results of operations.

EVgo also may be subject to audits of EVgo’s or EVgo OpCo’s income, sales and other transaction taxes by U.S.

federal, state, and local taxing authorities.

Outcomes from these audits could have an adverse effect on EVgo’s operating results and financial condition.

EVgo is susceptible to risks associated with an increased focus by stakeholders and regulators on climate change, which may adversely affect its business and results of operations.

Climate-related events, including the increasing frequency of extreme weather events and their impact on critical infrastructure in the U.S.

and elsewhere, have the potential to disrupt EVgo’s business, its third-party suppliers, and the business of its customers, and may cause it to experience higher attrition, losses and additional costs to maintain or resume operations.

In addition, EVgo’s customers may begin to establish sourcing requirements related to sustainability.

As a result, EVgo may receive requests for sustainability related information about its products, business operations, and use of sustainable materials, among other data.

EVgo’s inability to comply with these and other sustainability requirements in the future could adversely affect sales of and demand for its products.

Further, there is an increased focus, including by governmental and nongovernmental organizations, investors, customers, and other stakeholders on climate change matters, including increased pressure to expand disclosures related to the physical and transition risks related to climate change or to establish sustainability goals, such as the reduction of greenhouse gas emissions, which could expose EVgo to market, operational and execution costs or risks.

EVgo’s failure to establish targets or targets that are perceived to be appropriate, as well as to achieve progress on those targets on a timely basis, or at all, could adversely affect the reputation of its brand and sales of and demand for its products.

To the extent legislation is passed or regulations are adopted, such as rules proposed by the SEC with respect to enhance and standardized climate-related disclosures, EVgo could incur significant additional costs of compliance due to the need for expanded data collection, analysis, and certification with respect to greenhouse gas emissions and other climate change related risks.

EVgo may also incur additional costs or require additional resources to monitor, report and comply with such stakeholder expectations and standards and legislation, and to meet climate change targets and commitments if established.

Unregistered Sales of Equity Securities and Use of Proceeds

5 unchanged sentences

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What changed 10-Q

Item 1A. Risk Factors