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Item 7. Management’s Discussion and Analysis

2023-03-30 compared with 2022-03-24 · 320 added, 351 removed, 197 unchanged (77% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with EVgo’s consolidated financial statements and related notes thereto as of and for the years ended December 31, 2021 and December 31, 2020, included elsewhere in this Annual Report.

In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause EVgo’s actual results to differ materially from management’s expectations due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Annual Report.

Factors which could cause such differences are discussed therein.

Unless the context otherwise requires, all references in this section to “EVgo” for any period on or before January 15, 2020 refer to “EVgo Services” as the predecessor company and its consolidated subsidiaries, for the periods after January 15, 2020 through the closing of the CRIS Business Combination refer to “EVgo Holdco” as the successor company and its consolidated subsidiaries and for any period after the closing of the CRIS Business Combination, refer to EVgo Inc.

as the successor company and its consolidated subsidiaries.

EVgo owns and operates the United States’ largest public DC fast charging network and the first to be powered by 100% renewable electricity.

Founded in 2010 and a pioneer in fast charging, EVgo’s network of charging stations provides EV charging infrastructure to consumers and businesses.

With a rapid rise in electrification expected over the next two decades, EVgo offers the essential infrastructure technology and services required to help the world transition to a cleaner, more sustainable future.

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of EVgo’s consolidated results of operations and financial condition.

The discussion should be read in conjunction with EVgo’s consolidated financial statements and related notes thereto as of and for the years ended December 31, 2022 and 2021, included elsewhere in this Annual Report.

In addition to historical information, this discussion contains forward-looking statements that involve numerous risks, uncertainties and assumptions that could cause EVgo’s actual results to differ materially from management’s expectations due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in this Annual Report.

EVgo is a key leader in charging solutions, building and operating the infrastructure and tools to expedite the mass adoption of EVs for individual drivers, rideshare and commercial fleets and businesses.

Since its founding in 2010, EVgo has led the way to a cleaner transportation future and its network has been powered by 100% renewable energy since 2019 through the purchase of RECs.

EVgo has a flexible business model that derives value through multiple revenue streams.

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EVgo also earns revenue from the sale of regulatory credits generated through sales of electricity and its operation and ownership of its DCFC network.

This combination of revenue streams can drive long-term margin expansion and customer retention.

EVgo believes this combination of revenue streams can drive long-term margin expansion and customer retention.

Specifically, revenue is earned through the following streams:

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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 installs its chargers in parking spaces owned or leased by commercial or public-entity Site Hosts that desire to provide EV charging services at their respective locations.

Drivers can 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 generally installs its chargers in parking spaces owned or leased by commercial or public-entity Site Hosts that desire to provide EV charging services at their respective locations.

Commercial Site Hosts include retail and grocery stores, hotels, offices, medical complexes, airports and convenience stores.

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In many cases, Site Hosts will earn additional revenue from license payments made by the Company in exchange for use of the site.

incorporates flexible ownership models through EVgo eXtend TM , which helps Site Hosts invest in and build EV charging stations for their customers.

● Charging Revenue, OEM:

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, to expand EVgo’s network of owned DCFCs and to provide other related services.

Other related services currently provided to OEMs by EVgo include co-marketing, data services and digital application services.

EVgo views its OEM relationships as a core customer acquisition-channel.

EVgo also incorporates flexible ownership models through EVgo eXtend, through which certain Site Hosts can invest in and build EV charging stations that the Site Host owns and EVgo operates.

● Charging Revenue, Commercial :

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Access to EVgo’s 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.

● Charging Revenue, OEM:

EVgo is a key leader 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.

Other related services currently provided to OEMs by EVgo include co-marketing, data services and digital application services.

EVgo views its OEM relationships as a core customer acquisition channel.

In addition to offering access to its public network, EVgo offers dedicated charging solutions to fleets.

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Together, EVgo’s dedicated charging solutions and public fleet charging services provide fleets with a more robust and flexible charging solution.

● Regulatory Credit Sales :

As a charging station owner and operator, EVgo earns regulatory credits, such as LCFS credits and other regulatory credits, in states where such programs are enacted currently, including the FCI program in California.

These credits are generated through charging station operations based on the volume of kWh sold.

EVgo earns additional revenue through the sale of these credits to buyers obligated to purchase the credits to comply with the program mandates.

● Network Revenue, OEM:

Revenue related to contracts that have significant charger infrastructure build programs, which represent set-up costs under ASC Topic 606, Revenue From Contracts With Customers (“ASC 606”).

This revenue stream represents revenue related to contracts that have significant charger infrastructure build programs, which represent set-up costs under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Proceeds from these contracts are allocated to performance obligations including marketing activities, memberships, reservations and the expiration of unused charging credits.

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Any unused charging credits are recognized as breakage using the proportional method or, for programs where there is not enough information to determine the pattern of rights exercised by the customer, the remote method.

● eXtend Revenue:

Through EVgo eXtend, EVgo provides hardware, design, and construction services for charging sites, as well as ongoing operations, maintenance and networking and software integration solutions, while EVgo’s customers purchase and retain ownership of the charging assets.

For some eXtend customers, EVgo also provides grant application support and related services.

In 2022, EVgo announced an eXtend deal with the Pilot Company to deploy up to 2,000 fast charging stalls that the Pilot Company will own and EVgo will build, network, operate and maintain.

● Ancillary Revenue :

In addition to charging services, EVgo offers a variety of software-driven digital, development and operations services to its customers.

These offerings currently include customization of digital applications and charging data integration and EVgo currently pilots micro-targeted advertising services, smart charging reservations, loyalty programs and access to chargers behind parking lot pay gates.

EVgo also offers maintenance services and development and project management services, including EVSE installation, networking and operations.

EVgo offers a variety of software-driven digital, development and operations services to its customers.

EVgo has offerings that currently include customization of digital applications, charging data integration, micro-targeted advertising services, smart charging reservations, loyalty programs, access to chargers behind parking lot pay gates, and equipment procurement and operations services for customers operating dedicated networks.

EVgo also continues to evaluate and engage on potential market opportunities beyond these business models.

● Regulatory Credit Sales :

As a charging station owner and operator, EVgo earns regulatory credits, such as LCFS and other regulatory credits, in states where such programs are enacted currently, FCI in California and Clean Fuel Standards in Oregon.

These credits are generated through charging station operations based on the amount of kWh sold.

EVgo earns additional revenue through the sale of these credits to buyers obligated to purchase the credits to comply with the program mandates.

Recent Developments

COVID-19 Outbreak

The global outbreak of COVID-19 has resulted in significant volatility in the global and domestic economies, changes in consumer and business behavior, market downturns and restrictions on business and individual activities, which has led to overall reduced economic activity.

After decreased GWh throughput in 2020, economic activity has resumed and new EV sales have increased in 2021, resulting in charging revenue for the three months ended December 31, 2021 being higher than the last pre-COVID quarter, the three months ended December 31, 2019, by 53%.

The COVID-19 pandemic also impacted EVgo’s operations through construction delays and supply chain and shipping constraints.

EVgo also experienced delays in its Site Host negotiations as they devoted more time to day-to-day operations and employee health and safety.

Finally, for some contractual commitments, EVgo is required to adhere to a construction schedule over specific timeframes.

Those timelines were impacted due to delays associated with COVID-19, and it is possible that the ongoing pandemic could continue to impact these timelines in the future.

As part of the modified business practices in response to COVID-19, the incremental costs encompassed mainly the purchase of personal protective equipment, a subscription to Go Evo, a COVID-19 employee screening app, and COVID-19 testing expenses, which in total were not material.

How COVID-19 will affect EVgo’s future business results is unclear.

While the disruption is expected to be temporary, there is considerable uncertainty around the duration and magnitude of this disruption.

Development and commissioning lead times may be extended as a result of the measures taken by the state and local governments to mitigate the spread of COVID-19.

The extent of the financial impact and duration cannot be reasonably estimated at this time.

CRIS Business Combination

On January 21, 2021, EVgo, Thunder Sub and the EVgo Parties entered into the Business Combination Agreement.

On the CRIS Close Date, the Company consummated the CRIS Business Combination with CRIS, Thunder Sub, EVgo Holdings, EVgo Holdco and EVgo OpCo 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.

In connection with the CRIS Business Combination, the members of EVgo OpCo entered into the EVgo OpCo A&R LLC Agreement.

The EVgo OpCo A&R LLC Agreement, among other things, admitted Thunder Sub as the sole managing member of EVgo OpCo.

In accordance with the terms of the EVgo OpCo A&R LLC Agreement, the holders of EVgo OpCo Units generally have the right, subject to certain limitations, to redeem one EVgo OpCo Unit, together with one share of Class B common stock, for either one share of Class A common stock, or, at EVgo OpCo’s election, the cash equivalent to the market value of one share of Class A common stock, pursuant to and in accordance with the terms of the EVgo OpCo A&R LLC Agreement.

To the extent EVgo OpCo has available cash and subject to the terms of any current or future debt instruments, the EVgo OpCo A&R LLC Agreement requires EVgo OpCo to make pro rata cash distributions to all holders of EVgo OpCo Units, including Thunder Sub, in an amount sufficient to allow Thunder Sub and EVgo Inc.

to pay their taxes and to make payments under the Tax Receivable Agreement.

In addition, the EVgo OpCo A&R LLC Agreement requires EVgo OpCo to make non-pro rata payments to Thunder Sub to reimburse it for its corporate and other overhead expenses, which payments are not treated as distributions under the EVgo OpCo A&R LLC Agreement.

See the EVgo OpCo A&R LLC Agreement incorporated by reference as Exhibit 10.6 to this Annual Report.

On the CRIS Close Date, CRIS, Thunder Sub, EVgo Holdings and LS Power Equity Advisors, LLC, as agent, entered into the Tax Receivable Agreement.

The Tax Receivable Agreement generally provides for the payment by the Company Group to EVgo Holdings (along with their permitted assigns, the “TRA Holders”) of 85% of the net cash savings, if any, in U.S.

Federal, state and local income tax and franchise tax that the Company Group actually realizes (or is deemed to realize in certain circumstances) in periods after the CRIS Business Combination as a result of (i) certain increases in tax basis that occur as a result of the Company Group’s acquisition (or deemed acquisition for U.S.

Federal income tax

purposes) of all or a portion of such holder’s EVgo OpCo Units pursuant to the CRIS Business Combination or the exercise of the redemption or Call Rights set forth in the EVgo OpCo A&R LLC Agreement and (ii) imputed interest deemed to be paid by the Company Group as a result of, and additional tax basis arising from, any payments the Company Group makes under the Tax Receivable Agreement.

The Company Group will retain the benefit any remaining net cash savings.

See the Tax Receivable Agreement incorporated by reference as Exhibit 10.8 to this Annual Report.

CRIS PIPE ONE, LLC purchased 500,000 shares of Class A common stock in the PIPE for a total purchase price of $5,000,000.

Comstock, a member of EVgo Inc.’s Board of Directors, is an investor in CRIS PIPE ONE, LLC.

In addition, funds associated with PIMCO or their affiliates purchased 5,000,000 shares of Class A common stock in the PIPE for a total purchase price of $50,000,000.

The PIPE financing was consummated concurrently with the closing of the CRIS Business Combination.

The purpose of the PIPE is to raise additional capital for use by EVgo following the closing of the CRIS Business Combination.

The shares of Class B common stock of CRIS automatically converted into shares of Class A common stock at the time of the CRIS Business Combination on a one-for-one basis, subject to adjustment.

In the case that additional shares of Class A common stock or equity-linked securities were issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of an Initial Business Combination, the ratio at which shares of Class B common stock of CRIS converted into shares of Class A common stock were adjusted so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock of CRIS equaled, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of all shares of common stock outstanding upon completion of the Initial Public Offering, plus (ii) all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the CRIS Business Combination (excluding any shares of Class A common stock or equity-linked securities issued, or to be issued, to any seller in the CRIS Business Combination, and any private placement equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company).

Following the CRIS Business Combination, CRIS was renamed “EVgo Inc.” The CRIS Business Combination was accounted for as a reverse recapitalization.

EVgo OpCo was deemed the accounting predecessor and the combined entity was the successor registrant of the CRIS Business Combination, meaning that EVgo OpCo’s financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC.

Under this method of accounting, CRIS was treated as the acquired company for financial statement reporting purposes.

See Note 3 to the audited consolidated financial statements of EVgo included elsewhere in this Annual Report for more information.

Geopolitical and Macroeconomic Environment

During the last several years, the global economy has experienced disruption and sustained volatility due to a number of factors.

In particular, the global outbreak of COVID-19 resulted in significant volatility in the global and domestic economies, changes in consumer and business behavior, market downturns and restrictions on business and individual activities, resulting in overall reduced economic activity.

The COVID-19 pandemic impacted EVgo’s operations through reduced network throughput, construction delays and supply chain and shipping constraints.

EVgo also experienced delays in its Site Host negotiations as Site Hosts devoted more time to day-to-day operations and employee health and safety.

Finally, for some contractual commitments, EVgo is required to adhere to a construction schedule over specified timeframes.

Those timelines were impacted due to delays associated with COVID-19 and broader supply chain disruptions and it is possible that the pandemic and its ongoing effects could continue to impact these timelines in the future.

More recently, Russia’s military invasion of Ukraine and the subsequent sanctions imposed on Russia, Belarus, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic have led to and will likely continue to lead to, geopolitical instability, market uncertainty and supply disruptions.

Additionally, rising inflation has increased operating costs for many businesses and, together with slowing economic growth and fear of a recession, has led governments to change monetary policy in response.

Finally, recent concerns regarding the stability of the U.S.

and international financial systems has raised concerns regarding the ability of companies to access deposits;

potential losses of uninsured deposits and other financial assets;

the potential loss of access to working capital sources and access to favorable commercial financing terms (including terms related to interest rates and restrictive financial or operating covenants);

and systemic limitations on access to credit and liquidity sources.

The current economic environment remains uncertain and the extent to which EVgo’s operating and financial results for future periods will be impacted by the ongoing impacts of the COVID-19 pandemic, the ongoing conflict in Ukraine, increasing inflation, instability in the financial services sector, supply-chain disruptions, government efforts to reduce inflation and any recession will largely depend on future developments, which are highly uncertain and cannot be reasonably estimated at this time.

Government EV Initiatives

In order to encourage the use of EVs, the Federal government as well as state and local governments offer a variety of incentives and rebates.

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.

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.

These credits will begin to phase out when the vehicle manufacturer reaches certain production levels, and such credit has already been completely phased out for EVs manufactured by GM and Tesla, but legislation under consideration in Congress, if enacted as currently proposed, would alleviate 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 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 the goal of more than 8 million EVs on the road by 2030.

In September 2020, California Governor Gavin Newsom issued an executive order, announcing a target for all in-state sales of new passenger cars and trucks to be zero-emission by 2035.

Additionally, California has enacted its Clean Miles Standard aiming to reduce greenhouse gas emissions from TNCs, such as rideshare vehicles, through electrification and other means.

In 2021, California also

approved the 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.

EVgo believes these regulations, combined with a shift toward car-sharing and mobility as a service offering as well as broader fleet sustainability trends, will rapidly accelerate EV adoption by fleets in the coming years.

Recargo Acquisition

On July 9, 2021, a subsidiary of EVgo acquired Recargo from an affiliate of innogy SE, a European electric utility company based in Germany, for $25.0 million in cash, including repayment of $3.0 million of indebtedness, pursuant to the Recargo Agreement, dated July 9, 2021, by and among innogy e-Mobility US LLC, innogy SE solely in its capacity as guarantor, and EVgo Recargo HoldCo LLC.

Recargo is an EV cloud-based data solution provider formed in 2009 and focused on EV app development, market research, data licensing, reporting and advertising.

On December 29, 2021, Recargo converted from a California corporation to a California limited liability company.

In order to encourage the use of EVs, the U.S.

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 that promote EV adoption and related EV charging infrastructure.

EVgo believes the increase in promotion of EVs and the installation of related EV charging infrastructure will continue in part due to the ongoing implementation of the Infrastructure Investment and Jobs Act (the “Bipartisan Infrastructure Law”) and the recently enacted Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), which included extensions, expansions and revisions of various tax credits relating to EVs and EV charging infrastructure and may provide more flexibility and options in monetizing such credits.

In particular, the Inflation Reduction Act (i) expanded and extended tax credits for EV charging infrastructure and new EVs while also imposing new limitations and requirements for such credits, (ii) introduced tax credits for used EVs and commercial EVs and (iii) introduced the concept of transferability for certain tax credits, providing an additional option to monetize such credits.

However, the impact of the Inflation Reduction Act cannot be known with any certainty, and EVgo may not reap any or all of the expected benefits of the Inflation Reduction Act.

States including (but not limited to) California, Colorado, Delaware, Massachusetts, New Jersey and New York also offer various rebates, grants and tax credits to incentivize both EV and EVSE purchases.

Issuance of Common Stock

On November 10, 2022, EVgo entered into a Distribution Agreement with J.P.

Morgan Securities LLC, Evercore Group L.L.C.

and Goldman Sachs & Co.

LLC as sales agents, pursuant to which the Company may sell up to $200 million of shares of Class A common stock in “at the market” transactions at prevailing market prices (the “ATM Program”).

During the fourth quarter of 2022, EVgo sold 1,588,340 shares of Class A common stock pursuant to the ATM Program, with aggregate gross proceeds of $10.7 million.

After deducting commissions of $0.3 million, the Company received net proceeds of approximately $10.4 million.

Granting of EVgo’s 205 Petition

On February 3, 2023, EVgo filed a petition in the Court of Chancery under Section 205 of the Delaware General Corporation Law seeking (i) the validation of the stockholder vote approving CRIS’s certificate of incorporation in connection with the CRIS Business Combination and (ii) the validation and declaration of effectiveness of (a) EVgo’s Charter (including its filing and effectiveness, in each case as of July 1, 2021) and (b) the securities issued or to be issued in reliance on such approval and/or the validity of EVgo’s Charter, as of the respective dates of their issuance (including the 5,750,000 shares of Class A common stock into which the shares of Class B common stock converted upon the consummation of the CRIS Business Combination).

EVgo filed the petition due in part to a recent ruling of the Court of Chancery that created uncertainty as to the validity and effectiveness of these corporate acts and, consequently, as to its capital structure.

Such purported uncertainty was eliminated on February 21, 2023, when, following a hearing EVgo’s petition, the Court of Chancery issued an order validating each of the corporate acts described above, effective as of the time each such act was originally taken, notwithstanding any failures of authorization or potential failures of authorization described in, or resulting from the matters described in, the petition.

Key Components of Results of Operations

EVgo’s revenues are generated across various business lines.

The majority of EVgo’s revenue is generated from the sale of charging services, which are comprised of retail, OEM and commercial business lines.

In addition, EVgo generates ancillary revenues through the sale of data services, consumer retail services and the development and project management of third-party owned charging sites.

EVgo’s revenue is generated across various business lines.

The majority of EVgo’s revenue is generated from the sale of charging services, which are comprised of retail, OEM and commercial business lines, and its eXtend offering.

In addition, EVgo generates ancillary revenue through the sale of data services and consumer retail services.

EVgo also offers network services to OEM customers, including memberships and marketing.

Finally, as a result of owning and operating the EV charging stations, EVgo earns regulatory credits such as California LCFS credits which are sold to generate additional revenue.

Revenue From Related Parties

Historical revenue from related parties consists primarily of revenue received from the Nissan Agreement for the period in which Nissan was a minority owner of EVgo.

EVgo provided, and continues to provide, several service offerings under the Nissan contracts, including charging and ancillary services.

As of January 16, 2020, the date LS Power completed its acquisition of EVgo, Nissan is no longer a related party.

In addition, during 2020 and 2021, EVgo entered into various agreements with an affiliate of LS Power for the purchase and sale of California LCFS credits at prevailing market prices.

Finally, as a result of owning and operating the EV charging stations, EVgo earns regulatory credits such as LCFS credits, which are sold to generate additional revenue.

Revenue From Related Party

Revenue from related party is for data reporting services provided to an entity related to a former Board member and to various agreements with an affiliate of LS Power for the purchase and sale of LCFS credits at prevailing market prices.

Cost of Sales

Cost of R evenue (exclusive of depreciation and amortization shown separately below)

Cost of R evenue.

Cost of revenue consists primarily of energy usage fees, site operating and maintenance expenses, warranty and repair services and site lease and rent expense associated with charging equipment.

Depreciation and Amortization

Depreciation and amortization consist of depreciation related to EVgo’s property and equipment associated with charging equipment and installation and amortization of EVgo’s capital build liabilities.

EVgo is facing a challenging utility pricing environment where energy usage fees are increasing particularly in the summer months.

It is anticipated that this may lead to a margin decrease, as the Company may not be able to fully pass on these energy cost increases to its customers through increases to charging session pricing.

Depreciation, Net of Capital-Build Amortization.

Depreciation, net of capital-build amortization, consists of depreciation related to EVgo’s property and equipment associated with charging equipment and installation and is partially offset by the amortization of EVgo’s capital-build liabilities associated with third-party funding received for charging stations and other programs.

Gross Profit (Loss) and Gross Margin

Gross profit (loss) consists of EVgo’s revenue less its cost of revenue and depreciation and amortization.

Gross profit (loss) consists of EVgo’s revenue less its cost of revenue and depreciation, net of capital-build amortization.

Gross margin is gross profit (loss) as a percentage of revenue.

Operating Expenses

General and Administrative

General and Administrative Expenses.

General and administrative expenses primarily consist of payroll and related personnel expenses, IT and office services, customer service and network charges, office rent expense and professional services.

EVgo expects its general and administrative expenses to increase in absolute dollars as it continues to grow its business but to decrease over time as a percentage of revenue.

EVgo incurs additional expenses as a result of operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations and other professional services.

Transaction Bonus

Transaction bonus consists of expenses related to the contingent transaction bonus awarded to certain eligible employees in connection with LS Power’s acquisition of EVgo on January 16, 2020 (the “LS Power Acquisition Date”).

EVgo expects its general and administrative expenses to increase in absolute dollars as it continues to grow its business.

EVgo also expects to continue to incur additional expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, general insurance and directors’ and officers’ insurance, investor relations and other professional services .

Depreciation, Amortization and Accretion.

Depreciation, amortization and accretion consists of depreciation related to EVgo’s property, equipment and software not associated with charging equipment, and, therefore, not included in the depreciation and amortization expenses recorded in cost of sales.

Depreciation, amortization and accretion consists of depreciation related to EVgo’s property, equipment and software not associated with charging equipment and, therefore, not included in the depreciation, net of capital-build amortization expenses recorded in cost of sales.

This also includes amortization of EVgo’s intangible assets and accretion related to EVgo’s asset retirement obligations .

Operating Profit (Loss) and Operating Margin

Operating profit (loss) consists of EVgo’s gross profit or loss less general and administrative expenses, transaction bonus expense and depreciation, amortization and accretion in operating expenses.

Operating margin is operating loss as a percentage of revenue.

Operating profit (loss) consists of EVgo’s gross profit or loss less general and administrative expenses and depreciation, amortization and accretion in operating expenses.

Operating margin is operating profit (loss) as a percentage of revenue.

Interest Expense , R elated Party

Interest expense, related party consists primarily of interest due under the Secured Grid Demand Promissory Note, dated January 16, 2020, by and between EVgo Services and EVgo Holdings (the “LS Power Note”).

Pursuant to the terms of the Business Combination Agreement, the LS Power Note was cancelled immediately prior to the CRIS Close Date and deemed to be an equity contribution to the Company, immediately followed by a contribution of such equity interest by EVgo Holdings to EVgo Holdco.

Other Income , Net (Including Related Parties )

Other income, related parties, consisted of income received under agreements with NRG and Nissan.

On June 16, 2017, EVgo entered into a master EV services agreement with NRG to install and operate a network of EV charging stations on behalf of NRG.

NRG compensated EVgo for costs incurred for operating the charging network.

In addition, on March 29, 2016, EVgo entered into the Nissan Agreement, which required EVgo to install and operate a number of chargers on behalf of Nissan.

Nissan compensated EVgo for costs incurred for operating the charging network.

Under both agreements, the cost of the chargers was included in property and equipment and the related capital build liability for each agreement is included as a long-term liability on the balance sheet.

Subsequent to the LS Power Acquisition Date, income received under the NRG and Nissan agreements are disclosed as other income, net.

Other income, net, consists primarily of income received under the agreements with NRG and Nissan subsequent to the LS Power Acquisition Date as well as unrealized gains on marketable securities.

Interest expense, related party consists primarily of interest due under the Secured Demand Grid Promissory Note, dated January 16, 2020, by and between EVgo Services and EVgo Holdings (the “LS Power Note”).

Pursuant to the terms of the Business Combination Agreement, the LS Power Note was cancelled immediately prior to the CRIS Close Date and converted into equity of EVgo Services, immediately followed by a contribution of such equity interest by EVgo Holdings to EVgo Holdco.

Interest Income

Interest income consists primarily of interest earned on cash, cash equivalents and debt securities.

Other (Expense) Income , Net

Other (expense) income, net, consists primarily of unrealized gains and losses on marketable securities.

Change in Fair Values of Warrant and Earnout Liabilities

The change in the fair values of the warrant and earnout liabilities represents the gain (loss) on the adjustments to mark the warrant and earnout liabilities to fair value for each reporting period.

The change in the fair values of the warrant and earnout liabilities reflects the mark-to-market adjustments associated with warrants to purchase shares of the Company’s common stock and earnout liabilities for each reporting period.

EVgo’s provision for income taxes consists primarily of income taxes related to federal and state jurisdictions where business is conducted related to the Company’s ownership in EVgo OpCo.

For the years ended December 31, 2022 and 2021, EVgo’s provision for income taxes and effective tax rates were deemed to be de minimis.

As of December 31, 2021, EVgo maintained a full valuation allowance on EVgo’s net deferred tax assets.

There were no unrecognized tax benefits for uncertain tax positions, nor any amounts accrued for interest and penalties as of December 31, 2021.

As of December 31, 2022 and 2021, EVgo maintained a full valuation allowance on EVgo’s net deferred tax assets.

There were no unrecognized tax benefits for uncertain tax positions, nor any significant amounts accrued for interest and penalties as of December 31, 2022 and 2021.

Net Earnings (Loss) Attributable to Redeemable Noncontrolling Interest

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Network Throughput

Network throughput represents the total amount of kWh that was consumed by EVs using chargers and charging stations on EVgo’s network.

EVgo typically monitors kWh sales by business line, customer, and customer class.

Network throughput represents the total amount of GWh that was consumed by EVs using chargers and charging stations on EVgo’s network.

EVgo typically monitors GWh sales by three components:

business line, customer and customer class.

EVgo believes monitoring of component trends and contributions is the appropriate way to monitor and measure business-related health.

Number of DC Stalls on EVgo’s Network

Number of DC stalls represents the total number of DC stalls that EVgo has operational on its network.

Number of DC stalls represents the total number of DC stalls that EVgo has operational on its network (energized, inspected and commissioned).

One stall can charge one vehicle at a time.

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all chargers at such a site are counted as two stalls per one charger.

The following table represented network throughput and number of DC stalls on EVgo’s network:

Network throughput (GWh) for the three months ended

EVgo defines Receipts as total revenue plus change in deferred revenue over the same period.

Pursuant to the term of certain OEM contracts, EVgo is paid well in advance of when revenue can be recognized according to ASC Topic 606;

usually, the payment is tied to the number of stalls that commence operations under the applicable contract arrangement.

EVgo believes that its Receipts metric provide investors valuable insight into cash that has been generated from EVgo’s customers and EVgo’s periodic performance.

EVgo uses Receipts to monitor and measure EVgo’s commercial performance, liquidity and growth as EVgo’s OEM customers pay EVgo in advance for placing stalls in operation and then EVgo recognizes a portion of the related revenue over time.

The following table represents network throughput and the number of DC stalls on EVgo’s network:

Network throughput (GWh) for the year ended

Number of DC stalls on EVgo network as of

The following table presents the calculation of Receipts for the years ended December 31, 2022 and 2021:

(in thousands)

GAAP revenue 1

GAAP changes in deferred revenue 2

Total Receipts

Year-over-year percentage change in total Receipts

1 As presented in the consolidated statements of operations.

2 As presented in the consolidated statements of cash flows.

Change in deferred revenue for the year ended December 31, 2021 includes the first payment received in March 2021 of $20.0 million under one of EVgo’s OEM agreements.

Factors Affecting EVgo’s Operating Results

EVgo believes its performance and future success depend on several factors, including those discussed below and in “Item 1A.

Risk Factors.”

The EV charging market is heavily dependent on the general market for EVs and, therefore, EVgo’s revenue growth is directly tied to the adoption and continued acceptance and usage of passenger and commercial EVs.

EVgo believes its performance and future success depend on a number of factors, including those discussed below and in “Part I, Item 1A., Risk Factors.”

EVgo’s revenue growth is directly tied to the adoption and continued acceptance and usage of passenger and commercial EVs, which it believes drives the demand for electricity, charging infrastructure and charging services.

The market for EVs is still rapidly evolving and, although demand for EVs has grown in recent years, there is no guarantee of such future demand.

Factors impacting the adoption of EVs include perceptions about EV features, quality, safety, performance and cost; perceptions about the limited range over which EVs may be driven on a single battery charge; availability of services for EVs; consumers’ perception about the convenience, speed and cost of EV charging; volatility in the price of gasoline and diesel;

EV supply chain disruptions including, but not limited to, availability of certain components (e.g.

semiconductors), ability of EV OEMs to ramp-up EV production, availability of batteries, and battery materials;

availability, cost and desirability of other alternative fuel vehicles, plug-in hybrid electric vehicles and high fuel-economy gasoline and diesel-powered vehicles;

Additionally, as demand increases, the supply must keep pace for adoption to continue to accelerate at a rapid pace.

Factors impacting the adoption of EVs include perceptions about EV features, quality, safety, performance and cost; perceptions about the limited range over which EVs may be driven on a single battery charge; availability of services for EVs; consumers’ perception about the convenience, speed, reliability and cost of EV charging; volatility in the price of gasoline and diesel;

EV supply chain shortages and disruptions including, but not limited to, availability of certain components (e.g., semiconductors and critical raw materials necessary for the production of EVs and EV batteries), the ability of EV OEMs to ramp-up EV production and/or allocate sufficient quantities of EV models to the U.S.

domestic content requirements or other policy constraints;

availability of batteries and battery materials;

availability, cost and desirability of other alternative fuel vehicles, including plug-in hybrid EVs and high fuel-economy gasoline and diesel-powered vehicles;

and increases in fuel efficiency.

In addition, macroeconomic factors could impact demand for EVs, particularly since EVs can be more expensive than traditional gasoline-powered vehicles.

In addition, macroeconomic factors could impact demand for EVs, particularly since the sales price of EVs can be more expensive than traditional gasoline-powered vehicles.

If the market for EVs does not develop as expected or if there is any slowdown or delay in overall adoption of EVs, EVgo’s operating results may be adversely affected.

Electrification of Fleets

EVgo faces competition in the fleet segment, including from certain fleet customers who may opt to install and own the charging equipment on their property, but believes its unique set of offerings to fleets and existing charging network position EVgo advantageously to win business from fleets.

Fleet owners are generally more sensitive to the TCO of a vehicle than private-vehicle owners.

As such, electrification of vehicle fleets may occur more slowly or more rapidly than management forecasts based on the cost to purchase, operate and maintain EVs and the general availability of such vehicles relative to those of legacy ICE vehicles.

EVgo’s, and other competitors’, ability to offer competitive charging services and value-added ancillary services may impact the cadence at which fleets electrify and may impact EVgo’s ability to capture market share in fleets.

EVgo faces competition in the emerging fleet electrification segment, including from certain fleet customers who may opt to install and own charging equipment on their property;

however, EVgo believes its unique set of offerings to fleets and its existing charging network position EVgo advantageously to win business from fleets.

Fleet owners are generally more sensitive to the total cost of ownership of a vehicle than private-vehicle owners.

The ability of EVgo and its competitors’ to offer competitive charging services and value-added ancillary services may impact the pace at which fleets electrify and may impact EVgo’s ability to capture market share in fleets.

Additionally, federal, state and local government support and regulations directed at fleets (or lack thereof) may accelerate or delay fleet electrification and increase or reduce EVgo’s business opportunity.

EVgo’s management is currently monitoring several key rules that may encourage fleet electrification, including California’s ACT rule and the implementation of California’s Clean Miles Standard, as well as similar proposals in other zero emission vehicle states.

EVgo’s management is currently monitoring several key rules that may encourage fleet electrification, including California’s ACT rule and similar programs recently adopted by Massachusetts, New Jersey, New York, Oregon and Washington and the implementation of California’s Clean Miles Standard, as well as similar proposals in other zero emission vehicle states and potential action at the federal level.

The EV charging industry is increasingly competitive.

The principal competitive factors in the industry include charger count, locations and accessibility;

The principal competitive factors in the industry include charger count, locations, accessibility and reliability;

charger connectivity to EVs and ability to charge all standards;

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DCFC network reliability, scale and local density;

software-enabled services offering and overall customer experience;

software-enabled service offerings and overall customer experience;

operator brand, track record and reputation;

and access to equipment vendors, service providers and policy incentives, and pricing.

and access to equipment vendors and service providers;

policy incentives;

Existing competitors may expand their product offerings and sales strategies, new competitors may enter the market and certain fleet customers may choose to install and operate their own charging infrastructure.

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Government Mandates, Incentives and Programs

Federal government, some state and local governments, and certain utilities provide incentives to end-users and purchasers of EVs and EV charging stations in the form of rebates, tax credits, grants and other financial incentives.

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.

For example, EVgo has historically benefitted from the availability of Federal tax credits under Section 30C of the Code.

The credits under Section 30C of the Code expired on December 31, 2021, and thus, are not available going forward for EV charging stations placed in service after such date unless such

credits are extended retroactively.

Current legislation proposals include an extension of the credits under Section 30C of the Code as of and after December 31, 2021.

In addition, in November 2021, Congress passed and the President signed the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law, which included up to $7.5 billion in funding for electric vehicle charging infrastructure through the Department of Transportation.

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.

States also offer various rebates, grants and tax credits to incentivize both EV and EVSE purchases and have adopted or proposed mandates for EVs as well as mandates that aim to reduce greenhouse gas emissions through electrification such as California’s Clean Miles Standard and the ACT rule.

There can be no assurance that any of these programs will have sufficient availability or be extended, or if extended, that such extension will be effective retroactively or that these programs will not be otherwise reduced.

Any reduction in rebates, tax credits, grants or other financial incentives 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 and may not be able to monetize them given the nascent state of the market for such credits or be able to monetize such credits on favorable terms.

However, these incentives may expire on a particular date, end when the allocated funding is exhausted, or may 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 subsidizes the cost of placing in service EVgo’s charging stations.

The Inflation Reduction Act revised the credit under Section 30C to extend the credit until December 31, 2032, introduce the concept of transferability of such tax credits, expand the credit such that it is capped at $100,000 per item and increase eligibility requirements to require installation of EV charging stations in certain census tracts along with meeting prevailing wage and apprenticeship requirements, among other changes.

See Part I, Item 1A, “Risk Factors — 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 .” for further discussion.

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 compliance with such requirements could increase EVgo’s labor and other costs.

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

In addition, there can be no assurance that 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 features 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, future tariffs and policy incentives may favor equipment manufactured 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 EVgo from the ability to compete for certain charging infrastructure buildout solicitations and programs, including those initiated by Federal government agencies.

Furthermore, new tariffs and policy incentives could be put in place 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 build-out 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 encourage the adoption of EVs, which could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

Technology Risks

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EVgo engages a variety of third-party vendors for non-proprietary hardware and software components.

The ability of EVgo to continue to integrate its technology stack with technological advances in the wider EV ecosystem including EV model characteristics, charging standards, charging hardware, software and battery chemistries will determine EVgo’s sustained competitiveness in offering charging services.

There is a risk that some or all of the components of the EV technology ecosystem become obsolete and EVgo will be required to make significant investment to continue to effectively operate its business.

EVgo’s management believes EVgo’s business model is well-positioned to enable EVgo to remain technology-, vendor- and OEM-agnostic over time and allow the business to remain competitive regardless of long-term technological shifts in EVs, batteries or modes of charging.

Sale of Regulatory Credits

EVgo derives revenue from selling regulatory credits earned for participating in low carbon fuel standard programs, or other similar carbon or emissions trading schemes, in various states and jurisdictions in the United States.

The ability of EVgo to continue to integrate its technology stack with technological advances in the wider EV ecosystem including EV model characteristics, charging standards, charging hardware, software and battery chemistries and value-added customer services will determine EVgo’s sustained competitiveness in offering charging services.

There is a risk that some or all of the components of the EV technology ecosystem become obsolete and that EVgo will be required to make significant investments to continue to effectively operate its business.

EVgo’s management believes EVgo’s business model is well-positioned to enable EVgo to remain technology-, vendor- and OEM-agnostic

over time and allow the business to remain competitive regardless of long-term technological shifts in EVs, batteries or modes of charging.

Sales of Regulatory Credits

EVgo derives revenue from selling regulatory credits earned for participating in LCFS programs, or other similar carbon or emissions trading schemes, in various jurisdictions in the U.S.

EVgo currently sells these credits at market prices.

These credits are exposed to various market and supply and demand dynamics which can drive price volatility and are difficult to predict.

Price fluctuations in credits may have a material effect on future earnings.

These credits are exposed to various market and supply and demand dynamics which can drive price volatility and which are difficult to predict.

Price fluctuations in credits may have a material effect on future results of operations.

The availability of such credits depends on continued governmental support for these programs.

If these programs are modified, reduced or eliminated, EVgo’s ability to generate this revenue in the future would be adversely impacted.

In addition to current programs, EVgo’s management is currently monitoring proposed programs in Colorado, New York, Massachusetts, Washington, New Mexico and several other states, along with a potential Federal program, as potential future revenue streams.

In addition to current programs, EVgo’s management is currently monitoring the implementation of Washington’s program and additional proposals in varying stages of discussions including in New York, along with potential changes to the Renewable Fuels Standard.

Results of Operations

EVgo accounted for its acquisition by LS Power as a business combination under ASC Topic 805, Business Combinations (“ASC 805”).

Pursuant to ASC 805, EVgo elected to apply push-down accounting.

Under this method, the

purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.

Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired is allocated to goodwill.

Refer to Note 3 to the Company’s consolidated financial statements included elsewhere in this Annual Report, for additional information.

As a result of the acquisition, EVgo’s consolidated financial statements for the period from and after January 16, 2020 are presented on a different basis than that for the periods before January 16, 2020 due to the application of purchase accounting as of the acquisition date and, therefore, are not comparable.

The acquisition resulted in the following principal impacts for the period subsequent to the acquisition date:

● Increased depreciation, amortization, and accretion in operating expenses resulting from recording of tangible and intangible assets at fair value;

● Increased interest expense resulting from entering into the LS Power Note with EVgo Holdings in conjunction with the close of the business combination;

● Increased share-based compensation expense resulting from the share-based compensation plan formed in accordance with the terms of the acquisition agreement.

Year Ended December 31, 2022 Compared with Year Ended December 31, 2021

EVgo believes reviewing its operating results for the year ended December 31, 2020 by combining results of the 2020 predecessor period and 2020 successor period is more useful in discussing overall operating performance when compared to the 2021 successor period.

Results presented separately for the predecessor period and successor period are included within the consolidated financial statements included elsewhere in this Annual Report.

The table below presents EVgo’s results of operations for the years ended December 31, 2022 and 2021:

Year Ended December 31,

Years Ended December 31,

(dollars in thousands)

Revenue from related parties

Cost of revenue (exclusive of depreciation and amortization shown separately below)

Depreciation and amortization

General and administrative

Transaction bonus

Revenue from related party

Total revenue

Cost of revenue

Depreciation, net of capital-build amortization

General and administrative expenses

Depreciation, amortization and accretion

Operating loss

Interest expense

Interest expense, related party

Interest income

Other income, net

Other (expense) income, net

Change in fair value of earnout liability

Change in fair value of warrant liability

Loss before income tax expense

Income tax expense

net loss attributable to redeemable noncontrolling interest

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Number of DC stalls

*Percentage greater than 999% or not meaningful

The table below presents EVgo’s revenue for the years ended December 31, 2022 and 2021:

Year Ended December 31,

Years Ended December 31,

(dollars in thousands)

Charging revenue, retail

Charging revenue, OEM

Charging revenue, commercial

Charging revenue, OEM

Regulatory credit sales 1

Network revenue, OEM

eXtend revenue

Ancillary revenue 2

Regulatory credit sales

Total revenue

*Percentage greater than 999% or not meaningful

1 There were no amounts earned from related parties for the year ended December 31, 2022.

The amount for the year ended December 31, 2021 includes $0.6 million of revenue earned from related parties.

2 Amount for the year ended December 31, 2022 includes $0.1 million of revenue earned from a related party and there was no related party revenue for the year ended December 31, 2021.

Total revenue for the year ended December 31, 2022 increased $32.4 million, or 146%, to $54.6 million compared to $22.2 million for the year ended December 31, 2021.

As further discussed below, the increase in revenue during 2021 was primarily due to an 88% increase in retail charging revenue as well as an 84% increase in ancillary revenue, partially offset by the 42% decrease in OEM charging revenue.

As further discussed below, the increase in revenue during 2022 was primarily due to a $17.7 million increase in eXtend revenue, a $7.9 million increase in retail charging revenue, a $2.6 million increase in regulatory credit sales, and a $2.2 million increase in ancillary revenue.

Charging Revenue Retail.

Charging revenue, retail, for the year ended December 31, 2022 increased $7.9 million, or 71%, to $18.9 million compared to $11.0 million for the year ended December 31, 2021.

Year-over-year growth was due to an overall increase in usage and subscription fees driven primarily by a growing number of customers and increased charging volume, as well as the ongoing recovery from COVID-19.

Charging Revenue, OEM

Charging revenue, OEM, for the year ended December 31, 2021 decreased $0.6 million, or 42%, to $0.8 million compared to $1.4 million for the year ended December 31, 2020.

The decrease was primarily due to the sunset of the Nissan Agreement, in which EVgo partnered with Nissan to provide charging services for Nissan EVs.

Year-over-year growth was due to an overall increase in charging volume and subscription fees driven primarily by a growing number of customers and higher utilization, as well as the recovery from COVID-19.

Charging Revenue, Commercial.

Charging revenue, commercial, for the year ended December 31, 2021 increased $0.8 million, or 46%, to $2.4 million compared to $1.7 million for the year ended December 31, 2020.

The increase was attributable to new fleet contracts that became effective during 2021, increased charging volume by EVgo’s public fleet customers as well as the ongoing recovery from COVID-19.

Charging revenue, commercial, increased $0.9 million, or 39%, to $3.4 million for the year ended December 31, 2022.

The increase was attributable to new public commercial contracts that became effective during 2021 and increased charging volume by EVgo’s public commercial customers partially offset by a decrease due to the expiration of a dedicated commercial contract.

Charging Revenue, OEM.

Charging revenue, OEM, for the year ended December 31, 2022 increased $0.1 million, or 16%, to $0.9 million compared to $0.8 million for the year ended December 31, 2021.

The increase was primarily due to increased usage from OEM customers as well as implementation of new charging programs.

Regulatory Credit Sales.

Regulatory credit sales for the year ended December 31, 2022 increased $2.6 million, or 87%, to $5.7 million compared to $3.0 million for the year ended December 31, 2021.

The increase was primarily due to increased throughput resulting in additional credit generation and sales and a shift in the timing of when credits were sold during the first half of 2022, which was partially offset by decreases in credit rates from 2021 to 2022.

Network Revenue, OEM.

Network revenue, OEM, for the year ended December 31, 2021 increased $0.9 million, or 169%, to $1.5 million compared to $0.6 million for the year ended December 31, 2020 due to increased revenue under an OEM agreement related to marketing activities, membership fees and the breakage of prepaid charging credits.

Network revenue, OEM, for the year ended December 31, 2022 increased $0.9 million, or 62%, to $2.5 million compared to $1.5 million for the year ended December 31, 2021 primarily due to increased revenue under an OEM agreement related to marketing activities, membership fees and the breakage of prepaid charging credits that expired unused.

eXtend Revenue.

eXtend revenue for the year ended December 31, 2022 increased $17.7 million to $18.4 million compared to $0.8 million for the year ended December 31, 2021 primarily as a result of the new agreement that was executed in 2022 with the Pilot Company.

Ancillary Revenue.

Ancillary revenue for the year ended December 31, 2022 increased by $2.2 million, or 85%, to $4.8 million compared to $2.6 million for the year ended December 31, 2021.

The increase was primarily due to the acquisition of Recargo and subsequent inclusion of Recargo’s revenues.

Regulatory Credit Sales

Regulatory credit sales for the year ended December 31, 2021 decreased $0.2 million, or 7%, to $3.0 million compared to $3.2 million for the year ended December 31, 2020.

The decrease was primarily due to the lower average sale price per credit.

The increase was primarily due to a $2.1 million increase in PlugShare revenue.

Cost of Sales

Cost of Revenue (Exclusive of Depreciation and Amortization Shown Separately Below)

Cost of Revenue.

Cost of revenue for the year ended December 31, 2022 increased $24.4 million, or 143%, to $41.5 million compared to $17.1 million for the year ended December 31, 2021.

The increase in cost of sales during 2021 was primarily due to a $1.9 million, or 31%, increase in usage related costs as a result of the overall increase in throughput, as well as the increase in maintenance and other site-related costs resulting from the increased site and stall counts.

Partially offsetting those cost increases were decreases year-over-year in ancillary costs driven by lower engineering, procurement, and construction costs.

Depreciation and Amortization

Depreciation and amortization for the year ended December 31, 2021 increased $2.5 million, or 26%, to $12.0 million compared to $9.5 million for the year ended December 31, 2020 due to the DC stall count growing from 1,422 to 1,676 for the year ended December 31, 2021.

The increase in cost of revenue was due to an increase of $10.4 million in equipment costs related to equipment sold to eXtend and fleet clients, an increase of $5.4 million in non-energy costs related to increased stall count, a $5.1 million increase in energy and other variable costs due to increased throughput, and a $2.8 million increase in engineering and construction costs incurred for eXtend.

Depreciation, Net of Capital-Build Amortization.

Depreciation, net of capital-build amortization, for the year ended December 31, 2022 increased $6.8 million, or 57%, to $18.8 million compared to $12.0 million for the year ended December 31, 2021 due to the increase in stall count.

Gross Loss and Gross Margin

Gross loss for the year ended December 31, 2022 improved $1.2 million, or 17%, to $5.7 million compared to $6.8 million for the year ended December 31, 2021.

Gross margin for the year ended December 31, 2021 improved to negative 30.7% compared to negative 62.1% for the year ended December 31, 2020 due to the improved operating leverage, as well as an improved ancillary margin including the contribution from Recargo.

Gross margin for the year ended December 31, 2022 improved to negative 10.4% compared to negative 30.7% for the year ended December 31, 2021 due to higher margins on equipment revenue and improved leverage of fixed network operating costs.

Operating Expenses

General and Administrative

General and administrative costs for the year ended December 31, 2021 increased $35.8 million, or 101%, to $71.1 million compared to $35.3 million for the year ended December 31, 2020.

The difference was due to a $17.4 million increase in payroll expenses driven by higher headcount and higher share-based compensation, a $6.3 million increase in professional services and legal fees, a $6.0 million increase in project development costs driven by increased number of site surveys and non-operational site rent expense and a $3.0 million increase in insurance expenses as a result of the CRIS Business Combination, as well as other expenses undertaken by EVgo in order to drive ongoing growth year-over-year and in future years to ensure that EVgo can function as a public company.

Transaction Bonus

Transaction bonus expense for the year ended December 31, 2020 was $5.3 million due to a contingent transaction bonus awarded to certain eligible employees in conjunction with the LS Power acquisition of EVgo.

There were no such expenses recorded in 2021.

General and Administrative Expenses.

General and administrative expenses for the year ended December 31, 2022 increased $55.6 million, or 78%, to $126.7 million compared to $71.1 million for the year ended December 31, 2021.

The increase was primarily due to a $35.1 million increase in payroll expenses driven by higher headcount and higher share-based compensation, a $5.9 million increase in loss on abandoned projects, a $5.1 million increase in professional services and legal fees, a $4.8 million increase in software expenses and a $2.2 million increase in insurance expenses.

Depreciation, Amortization and Accretion.

Depreciation, amortization and accretion expenses for the year ended December 31, 2022 increased $5.2 million, or 44%, to $17.1 million compared to $11.9 million for the year ended December 31, 2021.

The increase was primarily due to purchase accounting related to EVgo’s acquisition of Recargo, which resulted in a higher amount of intangible assets that were amortized in 2021 compared to the prior year.

The increase was primarily due to $3.1 million in increased amortization of developed software, $1.6 million in increased amortization of intangibles from EVgo’s acquisition of PlugShare in 2021, and $0.3 million in increased accretion expense primarily due to additional stalls that went operational during 2022.

Operating Loss and Operating Margin

During the year ended December 31, 2021, EVgo had an operating loss of $89.8 million, an increase of $30.6 million, or 52%, compared to $59.2 million for the year ended December 31, 2020.

The increase year-over-year was primarily due to the increased general and administrative expenses, as well as depreciation, amortization and accretion expenses due to an increased number of chargers in EVgo’s network and the Recargo acquisition.

During the year ended December 31, 2022, EVgo generated an operating loss of $149.5 million, an increase of $59.7 million, or 66%, compared to $89.8 million for the year ended December 31, 2021.

Operating margin for the year ended December 31, 2022 improved to negative 273.9% compared to negative 404.4% for the year ended December 31, 2021.

Interest Expense

For year ended December 31, 2022, interest expense was de minimis.

There was no interest expense for the year ended December 31, 2021.

Interest Expense, Related Party

Interest expense, related party, for the year ended December 31, 2021 was $1.9 million, an increase of $0.5 million, or 36% compared to $1.4 million for the year ended December 31, 2020 due to the additional proceeds received from the LS Power Note during 2021.

Other Income, Net

Other income, net, for the year ended December 31, 2021 decreased to $0.6 million compared to $12.4 million for the year ended December 31, 2020.

The decrease was primarily due to decrease in income from one of the capital build programs that ended during 2020 and the release of a contingent liability during 2020.

Changes in Fair Values of Warrant and Earnout Liabilities

The change in the fair values of the warrant and earnout liabilities were due to the liabilities that were assumed in connection with the CRIS Business Combination.

For the year ended December 31, 2021, there was a $33.3 million gain primarily due to the change in the fair values of the liabilities from the CRIS Close Date through December 31, 2021.

Net loss for the year ended December 31, 2021 was $57.8 million, a $9.6 million, or 20%, increase compared to $48.2 million for the year ended December 31, 2020.

The increased loss was primarily due to the increased general and administrative expenses incurred to support growth;

the depreciation, amortization and accretion expenses incurred due to an increased number of chargers in EVgo’s network and the Recargo acquisition;

and the reduction of other income, net, partially offset by a $33.3 million change in the fair value of the warrant and earnout liabilities.

There was no interest expense, related party, for the year ended December 31, 2022, compared to $1.9 million for the year ended December 31, 2021.

The 2021 related party interest expense was related to the LS Power Note, which was cancelled immediately prior to the CRIS Close Date.

Interest Income

Interest income for the year ended December 31, 2022 was $4.5 million.

Interest income for the year ended December 31, 2021 was de minimis.

The increase was a result of the interest earned on cash and cash equivalents and debt securities held by the Company during the year ended December 31, 2022.

Other (Expense) Income, Net

Other expense, net, for the year ended December 31, 2022 was $0.8 million compared to other income, net, of $0.6 million for the year ended December 31, 2021.

The change was primarily due to realized and unrealized losses on investments and marketable securities.

Changes in Fair Values of Earnout and Warrant Liabilities

The changes in fair values of earnout and warrant liabilities for the year ended December 31, 2022 were gains of $3.5 million and $36.2 million, respectively, compared to gains of $2.2 million and $31.1 million, respectively, for the year ended December 31, 2021.

The increase in gain from the change in fair values of earnout and warrant liabilities of $1.3 million and $5.1 million, respectively, was due to a larger decrease in the liabilities from the prior year .

See “ Part II, Item 8.

Consolidated Financial Statements and Supplementary Data – Note 15 – Fair Value Measurements ” for more information.

Net loss for the year ended December 31, 2022 was $106.2 million compared to $57.8 million for the year ended December 31, 2021.

The increased loss was primarily due to increased general and administrative expenses incurred to support growth and increased depreciation, amortization and accretion expenses from the expansion of our charging network, which were partially offset by the higher gain from the changes in fair values of the earnout and warrant liabilities and increased interest income earned during the year.

Non-GAAP Financial Measures

This Annual Report includes the non-GAAP financial measures:

“Adjusted Cost of Sales,” “Adjusted Gross Profit (Loss),” “Adjusted Gross Margin,” “EBITDA,” “Adjusted EBITDA” and “Receipts.” EVgo believes these measures are useful to investors in evaluating EVgo’s financial performance.

In addition, EVgo uses these measures internally to establish forecasts, budgets, and operational goals to manage and monitor its business.

Further, due to the nature of certain OEM contracts, there is a significant timing difference between cash receipt and revenue recognition, therefore, EVgo believes Receipts (defined below) provides valuable insight to the ongoing performance and liquidity of the business.

EVgo believes that these non-GAAP financial measures help to depict a more realistic representation of the performance of the underlying business, enabling EVgo to evaluate and plan more effectively for the future.

EVgo believes that investors should have access to the same set of tools that its management uses in analyzing operating results.

Adjusted Cost of Sales (defined below), Adjusted Gross Profit (Loss) (defined below), Adjusted Gross Margin (defined below), EBITDA, Adjusted EBITDA (defined below) and Receipts are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.

This Annual Report includes the following non-GAAP financial measures, in each case as defined below:

“Adjusted Cost of Sales,” “Adjusted Cost of Sales as a Percentage of Revenue,” “Adjusted Gross Profit (Loss),” “Adjusted Gross Margin,” “Adjusted General and Administrative Expenses,” “Adjusted General and Administrative Expenses as a Percentage of Revenue,” “EBITDA,” “EBITDA Margin,” “Adjusted EBITDA” and “Adjusted EBITDA Margin.” EVgo believes these measures are useful to investors in evaluating EVgo’s performance.

In addition, EVgo management uses these measures internally to establish forecasts, budgets and operational goals to manage and monitor its business.

EVgo believes that these measures help to depict a more meaningful representation of the performance of the underlying business, enabling EVgo to evaluate and plan more effectively for the future.

Adjusted Cost of Sales, Adjusted Cost of Sales as a Percentage of Revenue, Adjusted Gross Profit (Loss), Adjusted Gross Margin, Adjusted General and Administrative Expenses, Adjusted General and Administrative Expenses as a Percentage of Revenue, EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.

These measures should not be considered as measures of financial performance under GAAP and the items excluded from or included in these metrics are significant components in understanding and assessing EVgo’s financial performance.

These metrics should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP.

Adjusted Cost of Sales, Adjusted Gross Profit (Loss), Adjusted Gross Margin, EBITDA and Adjusted EBITDA.

EVgo defines Adjusted Cost of Sales as cost of sales before:

(i) depreciation and amortization, (ii) share-based compensation, and (iii) O&M reimbursement.

Adjusted Gross Profit (Loss) is defined as revenues less Adjusted Cost of Sales.

Adjusted Gross Margin is defined as Adjusted Gross Profit (Loss) as a percentage of revenues.

EVgo defines EBITDA as net income (loss) before (i) interest expense, (ii) income taxes and (iii) depreciation and amortization.

EVgo defines Adjusted EBITDA as EBITDA plus (i) stock-based compensation expense, (ii) loss on disposal of assets and (iii) other unusual or nonrecurring income (expenses) such as bad debt expense.

During the third quarter of 2021, the Company changed its presentation of certain costs that were included as a component of cost of sales in previous periods.

The Company now presents these costs as a component of general and administrative expenses.

The following is a reconciliation of the previous and current presentation of cost of sales to adjusted cost of sales:

EVgo defines Adjusted Cost of Sales as cost of sales before (i) depreciation, net of capital-build amortization, and (ii) share-based compensation.

EVgo defines Adjusted Cost of Sales as a Percentage of Revenue as Adjusted Cost of Sales as a percentage of revenue.

EVgo defines Adjusted Gross Profit (Loss) as revenue less Adjusted Cost of Sales.

EVgo defines Adjusted Gross Margin as Adjusted Gross Profit (Loss) as a percentage of revenue.

EVgo defines Adjusted General and Administrative Expenses as general and administrative expenses before (i) share-based compensation, (ii) loss on disposal of property and equipment, net of recoveries, and impairment expense, (iii) bad debt (recovery) expense, and (iv) certain other items that management believes are not indicative of EVgo’s ongoing performance.

EVgo defines Adjusted General and Administrative Expenses as a Percentage of Revenue as Adjusted General and Administrative Expenses as a percentage of revenue.

EVgo defines EBITDA as net income (loss) before (i) depreciation, net of capital-build amortization, (ii) amortization, (iii) accretion, (iv) interest income, (v) interest expense, (vi) interest expense, related party, and (vii) income taxes.

EVgo defines EBITDA Margin as EBITDA as a percentage of revenue.

EVgo defines Adjusted EBITDA as EBITDA plus (i) share-based compensation, (ii) loss on disposal of property and equipment, net of recoveries, and impairment expense, (iii) loss (gain) on investments, (iv) bad debt (recovery) expense, (v) change in fair value of earnout liability, (vi) change in fair value of warrant liability, and (vii) certain other items that management believes are not indicative of EVgo’s ongoing performance.

EVgo defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue.

The following unaudited table presents a reconciliation of Adjusted Cost of Sales, Adjusted Cost of Sales as a Percentage of Revenue, Adjusted Gross Profit (Loss) and Adjusted Gross Margin to the most directly comparable GAAP measures, in each case, for the years ended December 31, 2022 and 2021:

(dollars in thousands)

Cost of sales, under previous method

Reclassification

Cost of sales, as reported

Depreciation and amortization in cost of sales

Share-based compensation and other

GAAP cost of sales

GAAP gross loss

GAAP cost of sales as a percentage of revenue

GAAP gross margin

GAAP cost of sales adjustments:

Depreciation, net of capital-build amortization

Share-based compensation

Adjusted Cost of Sales 1

The following table presents the reconciliation of gross loss, the most directly comparable GAAP measure, to adjusted gross profit for the years ended December 31, 2021 and 2020:

(dollars in thousands)

Gross loss, as reported

Depreciation and amortization in cost of sales

Share-based compensation and other

Adjusted Cost of Sales as a Percentage of Revenue 1

Adjusted Gross Profit 1

The following table presents the reconciliation of net loss, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the years ended December 31, 2021 and 2020:

Adjusted Gross Margin 1

In the first quarter of 2023, the Company updated its definition and presentation of Adjusted Cost of Sales to provide further clarity regarding the differences between GAAP Cost of Sales and Adjusted Cost of Sales, and to remove OEM reimbursement as an adjustment in the definition.

The Company believes that omitting OEM reimbursement from the calculation of Adjusted Cost of Sales is appropriate due to the immateriality of this adjustment in recent periods.

Prior period figures have been revised to conform to the updated definition and presentation.

The following unaudited table presents a reconciliation of Adjusted General and Administrative Expenses and Adjusted General and Administrative Expenses as a Percentage of Revenue to the most directly comparable GAAP measures for the years ended December 31, 2022 and 2021:

(dollars in thousands)

GAAP general and administrative expenses

GAAP general and administrative expenses as a percentage of revenue

GAAP general and administrative expenses adjustments:

Share-based compensation

Loss on disposal of property and equipment, net of recoveries, and impairment expense

Bad debt (recovery) expense

Adjusted General and Administrative Expenses

Adjusted General and Administrative Expenses as a Percentage of Revenue

The following unaudited table presents a reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to the most directly comparable GAAP measure, in each case, for the years ended December 31, 2022 and 2021:

(dollars in thousands)

GAAP net loss

GAAP net loss margin

Depreciation, net of capital-build amortization

Interest income

Interest expense

State income tax

Interest expense, related party

Income tax expense

EBITDA Margin

Share-based compensation

Loss on disposal of asset

Unrealized loss (gain) on investment

Bad debt expense

Loss on disposal of property and equipment, net of recoveries, and impairment expense

Loss (gain) on investments

Bad debt (recovery) expense

Change in fair value of earnout liability

Change in fair value of warrant liability

Release of contingent liability 1

Nonrecurring costs 2

Adjusted EBITDA

1 Includes income related to the release of a $4.0 million contingent liability for the year ended December 31, 2020.

See Note 3 to the audited consolidated financial statements of EVgo included elsewhere in this Annual Report.

2 Includes transaction costs related to the CRIS Business Combination and Recargo acquisition for the year ended December 31, 2021 and a $5.3 million of transaction bonus costs related to LS Power’s acquisition of EVgo for the year ended December 31, 2020.

See Note 3 to the audited consolidated financial statements of EVgo included elsewhere in this Annual Report.

EVgo defines Receipts, a non-GAAP financial measure, as total revenue plus change in deferred revenue over the same period.

Pursuant to the term of certain OEM contracts, EVgo is paid well in advance of when revenue can be recognized according to ASC 606;

usually, the payment is tied to the number of stalls that commence operations under the applicable contract arrangement.

EVgo believes that Receipts provide investors insight into cash generated from EVgo’s customers and EVgo’s periodic performance and liquidity.

EVgo uses Receipts to monitor and measure EVgo’s commercial performance, liquidity and growth as EVgo’s OEM customers pay EVgo in advance for placing stalls in operation, and then EVgo recognizes a portion of the related revenue over time.

The calculation of Receipts is set forth in the table below for the following periods:

(dollars in thousands)

Total revenues

Change in deferred revenue 1

Total Receipts

Year-over-year percentage change in total Receipts

1 As presented in the consolidated statements of cash flows.

Change in deferred revenue for the year ended December 31, 2021 includes the first payment received in March 2021 of $20.0 million under one of EVgo’s OEM agreements.

Adjusted EBITDA Margin

1 Comprised primarily of $1.8 million in transaction costs related to the CRIS Business Combination and the PlugShare acquisition for the year ended December 31, 2021.

See “ Part II, Item 8.

Consolidated Financial Statements and Supplementary Data – Note 3 – Business Combinations ” for more information.

Liquidity and Capital Resources

EVgo has a history of operating losses and negative operating cash flows.

As of December 31, 2021, EVgo had a cash balance of $485.2 million and working capital of $459.5 million.

As of December 31, 2020, EVgo had a cash balance of $7.9 million and a working capital deficit of $43.6 million.

The Company’s net cash inflow for the year ended December 31, 2021 was $477.3 million.

EVgo believes its cash on hand as of December 31, 2021 is sufficient to meet EVgo’s current working capital and capital expenditure requirements for a period of at least twelve months from the filing date of this Annual Report.

To date, EVgo’s primary sources of liquidity have been cash flows from the CRIS Business Combination, government grants, strategic relationships with OEMs and loans and equity contributions from its previous owners.

As of December 31, 2022, EVgo had $246.5 million of cash, cash equivalents, and restricted cash and working capital of $188.1 million.

As of December 31, 2021, EVgo had $485.2 million of cash, cash equivalents and restricted cash and a working capital deficit of $459.5 million.

The Company’s net cash outflow for the year ended December 31, 2022 was $238.7 million.

EVgo believes its cash and cash equivalents on hand as of December 31, 2022 is sufficient to meet EVgo’s current working capital and capital expenditure requirements for a period of at least twelve months from the filing date of this Annual Report.

To date, EVgo’s primary sources of liquidity have been cash flows from the CRIS Business Combination, revenues from its various revenue streams, government grants, proceeds from sales of EVgo’s Class A common stock loans and equity contributions from its previous owners and proceeds from sales of EVgo’s Class A common stock under the ATM Program.

EVgo’s primary cash requirements include operating expenses, satisfaction of commitments to various counterparties and suppliers and capital expenditures (including property and equipment).

EVgo’s principal uses of cash in recent periods have been funding its operations and investing in capital expenditures.

Following the consummation of the CRIS Business Combination, the Company Group is obligated to make payments under the Tax Receivable Agreement.

EVgo’s principal uses of cash in recent periods have been funding its operations and investing in capital expenditures, including the purchase of EV chargers for installation.

In July 2022, EVgo entered into the Delta Charger Supply Agreement and the Purchase Order with Delta, pursuant to which EVgo will purchase and Delta will sell EV chargers manufactured by Delta from time to time in specified quantities at certain delivery dates over a period of four years.

EVgo is obligated to purchase at least 1,000 chargers (which will enable the construction of 2,000 stalls) pursuant to the Delta Charger Supply Agreement and the Purchase Order 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 will receive delivery of 600 chargers in the 11 months following July 12, 2022 and is required to make full payment on such chargers within sixty (60) days of receipt.

EVgo’s obligations under the Purchase Order are take-or-pay obligations;

however, EVgo’s liability is capped at a maximum of the greater of $30.0 million or 50% of the value of any outstanding firm orders.

EVgo entered into the Delta Charger Supply Agreement and Purchase Order in order to meet its obligations under the Pilot Infrastructure Agreement, other potential contractual commitments and its own needs and intends to fund the capital expenditure required under the Delta Charger Supply Agreement and Purchase Order with proceeds from the Pilot Infrastructure Agreement as well as cash and cash equivalents on hand.

The term of the Tax Receivable Agreement commenced upon the completion of the CRIS Business Combination and will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or expired and all required payments are made, unless the Tax Receivable Agreement is terminated early (including upon a change of control).

The actual timing and amount of any payments that may be made under the Tax Receivable Agreement are unknown at this time and will vary based on a number of factors.

However, the Company Group expects that the payments that it will be required to make to TRA Holders in connection with the Tax Receivable Agreement will be substantial.

Any payments made by the Company Group to TRA Holders under the Tax Receivable Agreement will generally reduce the amount of cash that might have otherwise been available to EVgo Inc.

or EVgo OpCo.

Any payments made by the Company Group to TRA Holders under the Tax Receivable Agreement will generally reduce the amount of cash that might have otherwise been available to EVgo or EVgo OpCo.

To the extent EVgo OpCo has available cash and subject to the terms of any current or future debt or other agreements, the EVgo OpCo A&R LLC Agreement will require EVgo OpCo to make pro rata cash distributions to holders of EVgo OpCo Units, including Thunder Sub, in an amount sufficient to allow the Company Group to pay its taxes and to make payments under the Tax Receivable Agreement.

generally expects EVgo OpCo to fund such distributions out of available cash.

EVgo generally expects EVgo OpCo to fund such distributions out of available cash.

However, except in cases where the Company Group elects to terminate the Tax Receivable Agreement early, the Tax Receivable Agreement is terminated early due to certain mergers or other changes of control, or the Company Group has available cash but fails to make payments when due, generally the Company Group may elect to defer payments due under the Tax Receivable Agreement if it does not have available cash to satisfy its payment obligations under the Tax Receivable Agreement or if its contractual obligations limit its ability to make these payments.

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In certain circumstances (including an early termination of the Tax Receivable Agreement due to a change of control or otherwise), payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, the Company Group realizes in respect of the tax attributes subject to the Tax Receivable Agreement.

In the case of such an acceleration in connection with a change of control, where applicable, EVgo Inc.

generally expects the accelerated payments due under the Tax Receivable Agreement to be funded out of the proceeds of the change of control transaction giving rise to such acceleration, which could have a significant impact on EVgo’s ability to consummate a change of

control or the proceeds received by EVgo’s stockholders in connection with a change of control.

In the case of such an acceleration in connection with a change of control, where applicable, EVgo generally expects the accelerated payments due under the Tax Receivable Agreement to be funded out of the proceeds of the change of control transaction giving rise to such acceleration, which could have a significant impact on EVgo’s ability to consummate a change of control or the proceeds received by EVgo’s stockholders in connection with a change of control.

However, the Company Group may be required to fund such payment from other sources and as a result, any early termination of the Tax Receivable Agreement could have a substantial negative impact on EVgo’s liquidity or financial condition.

The following table summarizes EVgo’s consolidated cash flows for the years ended December 31, 2022 and 2021:

Year Ended December 31, 2022 Compared with Year Ended December 31, 2021

(dollars in thousands)

Years Ended December 31,

(in thousands)

Cash flows used in operating activities

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Cash flows provided by financing activities

Net increase in cash and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Operating Activities.

Cash used in operating activities for the year ended December 31, 2022 was $58.8 million compared to cash used in operating activities of $29.6 million during the year ended December 31, 2021.

The year-over-year increase was primarily due to an increase in net cash loss of $23.0 million.

In addition, there were increased cash outflows year-over-year of $6.7 million and $2.1 million related to prepaid expenses and other current and noncurrent assets, and accounts payable, respectively.

Offsetting these decreases were $22.6 million in cash inflows from deferred revenue and $2.9 million from increased accrued expenses year-over-year.

This change was driven primarily by the timing of payments during 2022 compared to 2021.

The year-over-year change primarily reflected a $23.6 million cash loss from operations, a $8.9 million decrease in cash flows from deferred revenue and an $8.3 million decrease in cash flows from accounts receivable, net, partially offset by a $3.3 million increase in cash flows from prepaid expenses and other current and noncurrent assets, a $2.9 million increase in cash flows from the receivable from a related party, a $2.7 million increase in cash flows from accounts payable and a $2.3 million increase in cash flows from customer deposits.

Investing Activities.

Cash used in investing activities for the year ended December 31, 2021 was $87.8 million, relating to purchases of property and equipment.

Of the $87.8 million, $65.0 million was mainly comprised of purchases for construction in process and charging equipment and the remaining amount was related to the Recargo acquisition.

During the year ended December 31, 2020, purchases of property and equipment were $19.5 million, comprised of charging equipment and construction in process.

Cash used in investing activities for the year ended December 31, 2022 was $199.7 million, primarily comprised of purchases of property, equipment and software.

During the year ended December 31, 2021, cash used in investing activities was $87.8 million, consisting of $65.0 million of purchases of property and equipment, and $22.8 million paid, net of cash received, for the acquisition of PlugShare.

Financing Activities .

Cash provided by financing activities for the year ended December 31, 2021 was $594.6 million, primarily comprised of proceeds from the CRIS Business Combination, related party note payable and capital-build funding.

Cash provided by financing activities for the year ended December 31, 2020 was $47.1 million, consisting of proceeds from the related party note payable, capital-build funding and contributions.

Cash provided by financing activities for the year ended December 31, 2022 was $19.8 million, primarily comprised of net proceeds from sales of shares of Class A common stock in the fourth quarter of 2022 under the ATM Program and proceeds from capital-build funding received for charging stations.

Cash provided by financing activities for the year ended December 31, 2021 was $594.6 million, consisting principally of $601.6 million in proceeds received in connection with the CRIS Business Combination and $24.0 million in proceeds from related party note payable, partially offset by $28.4 million in transaction costs paid in connection with the CRIS Business Combination.

Working Capital .

EVgo’s working capital as of December 31, 2021 was $459.5 million, compared to a deficit of $43.6 million as of December 31, 2020.

During the year ended December 31, 2021, EVgo’s cash balance increased by $477.3 million, accounts receivable, capital build, increased by $6.4 million and prepaid expenses increased by $1.8 million.

The increase in assets were partially offset by the decrease in the related party note payable of $39.2 million, an increase in the accrued expenses balance of $16.1 million and an increase in the customer deposits balance of $3.9 million.

EVgo’s working capital as of December 31, 2022 was $188.1 million, compared to $459.5 million as of December 31, 2021.

During the year ended December 31, 2022, EVgo’s cash, cash equivalents and restricted cash balance decreased by $238.7 million, accrued liabilities increased by $12.2 million, deferred revenue, current increased by $10.9 million, and accounts receivable, net, increased by $8.5 million.

Contractual Obligations and Commitments.

As of December 31, 2021, EVgo had $28.7 million in outstanding purchase order commitments to EVgo’s contract manufacturers and component suppliers for charging equipment.

In certain instances, EVgo is permitted to cancel, reschedule or adjust these orders.

EVgo also enters into leases as a lessee in the form of ground leases of land for certain properties, and as part of EVgo’s corporate operations, for office, warehouse and laboratory leases.

Currently, EVgo’s operating leases do not have residual value guarantees or other restrictions or covenants.

EVgo expects to fund these obligations through existing financing or cash flows from operations.

As of December 31, 2021, EVgo’s future contractual obligations as a lessee included operating lease obligations of $2.3 million during 2022 and $13.7 million thereafter.

EVgo has material cash requirements for known contractual obligations and commitments in the form of operating leases, purchase commitments and certain other liabilities that are disclosed in “ Part II, Item 8.

Consolidated Financial Statements and Supplementary Data – Note 13 – Commitments and Contingencies ” and discussed below.

EVgo generally expects to fund these obligations through its existing cash and cash equivalents and future financing or cash flows from operations.

Critical Accounting Policies and Estimates

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Revisions to estimates are recognized prospectively.

See Note 2 to the Company’s consolidated financial statements included elsewhere in this Annual Report for additional description of the significant accounting policies that have been followed in preparing EVgo’s consolidated financial statements.

for more information See “ Part II, Item 8.

Consolidated Financial Statements and Supplementary Data –

Note 2 – Summary of Significant Accounting Policies ” for additional description of the significant accounting policies that have been followed in preparing EVgo’s consolidated financial statements.

The accounting policies described below are those EVgo considers to be the most critical to an understanding of its financial condition and results of operations and that require the most complex and subjective management judgment.

EVgo considers its critical accounting estimates to be those related to its asset retirement obligations, business combinations, and warrant liability, which are described below.

EVgo considers its critical accounting estimates to be those related to its revenue recognition, business combinations and warrant liability, which are described below.

Revenue Recognition

EVgo recognizes revenues in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification Topic 606, Revenue from Contracts with Customers .

Recording revenues requires judgment, including determining whether an arrangement includes multiple performance obligations, whether any of those obligations are distinct and cannot be combined and allocation of the transaction price to each performance obligation based on the relative standalone selling prices (“SSP”).

Some customers receive certain contract elements over time.

Changes to the elements in an arrangement or, in EVgo’s determination, to the relative SSP for these elements, could materially affect the amount of earned and unearned revenues reflected in its consolidated financial statements.

EVgo recognizes revenue in accordance with ASC 606.

Recording revenue requires judgment, including determining whether an arrangement includes multiple performance obligations, whether any of those obligations are distinct and cannot be combined and allocation of the transaction price to each performance obligation based on the relative standalone selling prices (“SSP”).

Revenue for performance obligations can be recognized over time or at a point in time depending on the nature of the performance obligation.

Changes to the elements in an arrangement or, in EVgo’s determination, to the relative SSP for these elements, could materially affect the amount of earned and unearned revenue reflected in its consolidated financial statements.

Understanding the complex terms of some of EVgo’s agreements and determining the appropriate time, amount and method under which the Company should recognize revenue for the related transactions requires significant judgment.

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The Company does not disclose the transaction price allocated to remaining performance obligations for (i) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice and (ii) contracts with variable consideration allocated entirely to a single performance obligation.

The Company’s remaining performance obligations under these contracts include providing charging services and maintenance services which will be recognized over the next one to four years.

Any element of variable consideration is due to the unknown number of users that will receive charging credits or an unknown number of sites that will receive maintenance services.

The Company has determined it is not necessary to estimate variable consideration as the uncertainty resolves itself monthly in accordance with the contracts’ revenue recognition pattern.

The Company’s remaining performance obligations under these contracts include providing charging services, branding services, and maintenance services which will generally be recognized over the contract term.

The Company’s customer contracts may include variable consideration such as that due to the unknown number of users that will receive charging credits or an unknown number of sites that will receive maintenance services.

For such variable consideration, the Company has determined it is not necessary to estimate variable consideration as the uncertainty resolves itself monthly in accordance with the contracts’ revenue recognition pattern.

The timing and amount of revenue recognition in a period could vary if different judgments were made.

The Company may also estimate variable consideration under the expected value method or the most likely amount method.

Additionally, where there are multiple performance obligations, judgment is required to determine revenue for each distinct performance obligation.

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At contract inception, EVgo determines whether EVgo satisfies the performance obligation over time or at a point in time.

Revenues from charging – OEM and ancillary revenue are primarily recognized ratably over time or as fee-bearing

usage occurs.

Revenues from charging – retail, charging – commercial, and LCFS are usage-based services and recognized at a point in time upon the delivery of the charging services.

Asset Retirement Obligations

EVgo has determined that EVgo is obligated by contractual or regulatory requirements to remove facilities or perform other remediation upon retirement of certain assets.

Determination of the amounts to be recognized in EVgo’s consolidated financial statements is based upon numerous estimates and assumptions, including expected settlement dates, future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates.

These estimates and assumptions are very subjective.

In addition, there are other external factors which could significantly affect the ultimate settlement costs or timing for these obligations, including changes in environmental regulations and other statutory requirements and fluctuations in industry costs.

As a result, EVgo’s estimates of asset retirement obligations are subject to revision due to the factors described above.

Changes in estimates prior to settlement result in adjustments to both the liability and related asset values.

EVgo completes an impairment test of goodwill at least annually or more frequently if facts or circumstances indicate that goodwill might be impaired.

Goodwill is tested for impairment at the reporting unit level.

EVgo first performs a qualitative assessment of certain of EVgo’s reporting unit.

Factors considered in the qualitative assessment include general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of EVgo’s reporting unit, events or changes affecting the composition or carrying amount of the net assets of EVgo’s reporting unit, sustained decrease in EVgo’s share price, and other relevant entity-specific events.

If EVgo elects to bypass the qualitative assessment or if EVgo determines, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, a quantitative test would be required.

EVgo then performs the goodwill impairment test for each reporting unit by comparing the reporting unit’s carrying amount, including goodwill, to its fair value, which is measured based upon, among other factors, a discounted cash flow analysis, as well as market multiples for comparable companies.

Estimates critical to EVgo’s evaluation of goodwill for impairment include forecasts for revenue, EBITDA growth and long-term growth rates, as well as the discount rates.

If the carrying amount of the reporting unit is greater than its fair value, goodwill is considered impaired.

Long-Lived Assets

Long-lived assets, including finite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

If EVgo identifies events or changes in circumstances that could impact recoverability, EVgo compares the carrying value of the assets with their estimated future undiscounted cash flows.

If it is determined that an impairment has occurred, the loss would be recognized during that period.

The impairment loss would be calculated as the difference between the asset carrying values and the present value of estimated net cash flows or comparable market values, giving consideration to recent operating performance and pricing trends.

EVgo did not recognize any impairment losses for any periods presented.

Revenues from charging – OEM are primarily recognized ratably over time or as fee-bearing usage occurs.

Revenues from charging – retail, charging – commercial and LCFS are usage-based services and recognized over time or at a point in time upon the delivery of the charging products or services.

eXtend and ancillary revenues are recognized over time based on a time-based or cost-based approach or at a point in time as performance obligations are satisfied.

Business Combinations

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While the ultimate responsibility resides with management, for certain acquisitions, EVgo retains the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities, including intangible assets and tangible long-lived assets.

Acquired intangible assets, excluding goodwill, are valued using various methodologies including discounted cash flows, relief from royalty and multiperiod excess earnings depending on the type of intangible asset purchased.

Acquired intangible assets, excluding goodwill, are valued using various methodologies including discounted cash flows, relief from royalty, and multiperiod excess earnings, among others, depending on the type of intangible asset purchased.

These methodologies incorporate various estimates and assumptions, such as projected revenue growth rates, profit margins and forecasted cash flows based on discount rates and terminal growth rates.

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Recent Accounting Pronouncements

For a discussion of EVgo’s new or recently adopted accounting pronouncements, see Note 2 to the consolidated financial statements of EVgo, as of and for the years ended December 31, 2021 and 2020, included elsewhere in this Annual Report.

For a discussion of EVgo’s new or recently adopted accounting pronouncements, see “ Part II, Item 8.

Consolidated Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies ” as of and for the years ended December 31, 2022 and 2021.

On April 5, 2012, the JOBS Act was signed into law.

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.

Following the CRIS Business Combination, EVgo is an “emerging growth company” under the JOBS Act and is allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies.

The JOBS Act includes provisions that, among other things, relax certain reporting requirements for qualifying public companies.

Following the CRIS Business Combination, EVgo has qualified as an “emerging growth company” (“EGC”) under the JOBS Act and, as a result, is permitted to comply with new or revised accounting pronouncements based on the effective date for private (i.e., not publicly traded) companies.

EVgo elected to delay the adoption of new or revised accounting standards and as a result, EVgo may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

As a result, EVgo’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

As an “emerging growth company,” EVgo is not required to, among other things, (a) provide an auditor’s attestation report on EVgo’s system of internal control over financial reporting, (b) provide all of the compensation disclosure that may be required of non-emerging growth public companies, (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (d) disclose comparisons of the chief executive officer’s compensation to median employee compensation.

These exemptions will apply for a period of five years following the completion of the Initial Public Offering or until EVgo otherwise no longer qualifies as an “emerging growth company.”

Following the CRIS Business Combination, EVgo was and currently is a “smaller reporting company” as defined under the Exchange Act.

As an EGC, EVgo is not required to, among other things, (a) provide an auditor’s attestation report on EVgo’s system of internal control over financial reporting, (b) provide all of the compensation disclosure that may be required of non-EGC public companies, (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (d) disclose comparisons of the chief executive officer’s compensation to median employee compensation.

These exemptions will apply for a period of five years following the completion of the Initial Public Offering or until EVgo otherwise no longer qualifies as an EGC.

Additionally, following the CRIS Business Combination, EVgo has qualified as a “smaller reporting company” as defined under the Exchange Act.

EVgo may continue to be a smaller reporting company so long as either (i) the market value of shares of its common stock held by non-affiliates is less than $250 million or (ii) its annual revenue was less than $100 million during the most recently completed fiscal year and the market value of shares of its common stock held by non-affiliates is less than $700 million.

If EVgo is a smaller reporting company at the time it ceases to be an emerging growth company, EVgo may continue to rely on exemptions from certain disclosure requirements that are available to smaller

reporting companies.

Specifically, as a smaller reporting company, EVgo may choose to present only the two most recent fiscal years of audited financial statements in its Annual Report on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, similar to emerging growth companies, if EVgo is a smaller reporting company under the requirements of (ii) above, EVgo would not be required to obtain an attestation report on internal control over financial reporting issued by its independent registered public accounting firm.

If EVgo is a smaller reporting company at the time it ceases to be an EGC, EVgo may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company, EVgo may choose to present only the two most recent fiscal years of audited financial statements in its Annual Report on Form 10-K and has reduced disclosure obligations regarding executive compensation and, similar to EGCs, if EVgo is a smaller reporting company under the requirements of (ii) above, EVgo would not be required to obtain an attestation report on internal control over financial reporting issued by its independent registered public accounting firm.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis