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Item 7. Management’s Discussion and Analysis

2024-03-06 compared with 2023-03-30 · 228 added, 249 removed, 268 unchanged (64% of the section changed)

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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.

The discussion should be read in conjunction with EVgo’s consolidated financial statements and the related notes thereto as of and for the years ended December 31, 2023 and 2022 , 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.

The foundation of the Company’s business is the development and operation of EV charging sites through which it dispenses electricity to EVs driven by individuals, commercial drivers and fleet operators.

EVgo’s principal revenue stream is from the provision of charging services for EVs of all types on EVgo’s network.

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

EVgo is one of the nation’s largest public fast charging networks, featuring over 950 fast charging locations across more than 35 states, including stations built through EVgo eXtend, its white label service offering.

EVgo is accelerating transportation electrification through partnerships with automakers, fleet and rideshare operators, retail hosts such as grocery stores, shopping centers, and gas stations, policy leaders, and other organizations.

The foundation of the Company’s business is building, owning and operating EV fast charging sites that deliver charging to EVs driven by individuals, commercial drivers, and fleet operators.

EVgo’s core revenue stream is from the provision of charging services for EVs of all types on EVgo’s network.

In addition, a variety of business-to-business commercial relationships provide EVgo with revenue or cash payments based on commitments to build new infrastructure, provide guaranteed access to charging, and offer marketing, data and software-driven services.

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

Specifically, revenue is earned through the following streams:

Specifically, charging network revenue is earned through the following streams:

● Charging Revenue, Retail:

EVgo sells electricity directly to drivers who access EVgo’s publicly available networked chargers.

Various pricing plans exist for customers and drivers have the choice to charge as members (with monthly fees and reduced per-minute or kWh pricing) through a subscription service or as non-members.

Drivers 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.

EVgo believes its offerings are well aligned with the goals of Site Hosts, as many commercial businesses increasingly view EV charging capabilities as essential to attract tenants, employees, customers and visitors and achieve sustainability goals.

Site Hosts are generally able to obtain these benefits at no cost when partnering with EVgo through EVgo’s owner and/or operator model, as EVgo is responsible for the installation and operation of chargers located on Site Hosts’ properties.

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

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.

Various pricing plans exist for customers and drivers have the choice to charge through a subscription offering or a variety of pay-as-you-go plans.

Drivers locate the chargers through EVgo’s mobile application, their vehicle’s in-dash navigation system, or third-party databases, such as PlugShare, that license charger-location information from EVgo.

EVgo chargers are generally installed in parking spaces owned or leased by commercial or public-entity Site Hosts that desire to provide charging services at their respective locations.

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

EVgo offerings are well aligned with the goals of Site Hosts, as many commercial businesses increasingly view charging capabilities as essential to attracting tenants, employees, customers and visitors, and achieve sustainability goals.

Site Hosts are generally able to obtain these benefits at no cost when partnering with EVgo through the Company’s owner and/or operator model, in which EVgo is responsible for the development, construction, and operation of chargers located on Site Hosts’ properties.

In many cases, Site Hosts will earn revenue from license payments in the form of parking space rental fees that EVgo pays in exchange for use of the site.

● Charging Revenue, Commercial :

High volume fleet customers, such as TNCs or delivery services, can access EVgo’s charging infrastructure through EVgo’s public network.

Pricing for charging services is most often negotiated directly between EVgo and the fleet owner based on the business needs and usage patterns of the fleet.

High volume fleet customers, such as transportation networking companies or delivery services, can access EVgo’s charging infrastructure through EVgo’s vast public network.

Pricing for charging services is most often negotiated directly with the fleet owner based on the business needs and usage patterns of the fleet.

In these arrangements EVgo contracts with and bills, either the fleet owner directly or an individual fleet driver utilizing EVgo’s chargers.

Access to 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.

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

Through its fleet product, EVgo develops, builds, and services charging assets for fleets either at their own depot locations

or at off-site charging hubs that EVgo has secured without requiring a fleet to directly incur capital expenditures.

EVgo offers a variety of pricing models for dedicated charging solutions, including a mix of volumetric commitments and variable and fixed payments for provision of charging services.

Together, EVgo’s dedicated charging solutions and public fleet charging services provide fleets with charging infrastructure options that are robust and flexible as the transition to electrified transportation accelerates.

● 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.

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.

EVgo is a pioneer in OEM charging programs with revenue models to meet a wide variety of OEM objectives related to the availability of charging infrastructure and the provision of charging services for EV drivers.

EVgo contracts directly with OEMs to provide charging services to drivers who have purchased or leased such OEMs’ EVs and who access EVgo’s public charger network.

Other related services 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.

As part of this offering, EVgo typically builds, owns and operates charging infrastructure for the exclusive use of a dedicated customer and is currently offering flexible ownership models, such as its ChaaS offering.

EVgo’s dedicated and ChaaS offerings provide a value proposition for fleets who might otherwise feel compelled to procure, install and manage their own EVSE.

EVgo offers a variety of pricing models for its dedicated charging solutions, including a mix of volumetric commitments and variable and fixed payments to EVgo for provision of its services.

ChaaS and dedicated charging allow for tailored fleet charging solutions without requiring fleets to directly incur capital expenditures or operating and management costs related to charging EVs.

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

EVgo’s OEM relationships are a core customer-acquisition channel.

● 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.

As a charging station owner and operator, EVgo earns regulatory credits, such as Low Carbon Fuel Standard (“LCFS”) credits and other regulatory credits, in states where such programs are enacted currently, including the Fast Charging Infrastructure program in California.

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

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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.

EVgo generates non-charging network revenue from the following streams:

● 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.

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 customers purchase and retain ownership of the charging assets.

Existing customers with EVgo accounts are able to access eXtend chargers through the EVgo app, among other options.

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

● Ancillary Revenue :

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.

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

These offerings currently include customization of digital applications, charging data integration, loyalty programs, access to chargers behind parking lot or garage pay gates, microtargeted advertising and charging reservations as well as all services provided under PlugShare such as data, research and advertising services and equipment procurement and operational services for customers operating dedicated networks.

EVgo continues to evaluate and engage in opportunities to use its foundational expertise in charging infrastructure to provide value-added services to the rapidly growing EV ecosystem.

Recent Developments

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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.

For example, the conflict between Russia and Ukraine and an escalation of tensions and conflict in Israel and the broader Middle East region have led to disruptions, instability and volatility in global markets and industries and will likely continue to lead to, geopolitical instability, market uncertainty and supply disruptions.

Additionally, recent

inflationary pressures have resulted in and may continue to result in increases to the costs of charging equipment and personnel, which could in turn cause capital expenditures and operating costs to rise.

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

Federal Reserve and other central banks to increase interest rates, which could have the effects of raising the cost of capital and depressing economic growth.

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 conflicts in Ukraine, Israel and the broader Middle East region, rates of 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.

In addition, continued long lead times of grid equipment such as transformers may impact EVgo’s development cycle.

Government EV Initiatives

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.

federal government and some state and local governments provide incentives to end users and owners of EVs and EV charging stations in the form of rebates, tax credits, low-cost funding and other financial incentives that promote EV adoption and related EV charging infrastructure.

EVgo believes the 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 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.

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.

For example, the results of the 2024 Presidential and Congressional elections and resulting legislative or regulatory actions, if pursued, could impact the availability or value of these incentives or reduce access to such low-cost funding.

Further, the impact of the Inflation Reduction Act and other government EV initiatives, including regulatory requirements and restrictions that may impact the ability of EVgo and its competitors to take advantage of such initiatives, cannot be known with any certainty at this time, and EVgo may not reap any or all of the expected benefits of the Inflation Reduction Act or the Bipartisan Infrastructure Law.

For example, federal guidance on Buy America requirements applicable to the National Electric Vehicle Infrastructure (“NEVI”) Program, which was established by the Bipartisan Infrastructure Law, requires domestic assembly and U.S.

steel requirements for chargers to qualify for funding under the NEVI program, with higher domestic content percentages required in 2024.

These requirements could increase costs and lead to delays in the installation of EV chargers in the U.S.

as charging providers and their customers adjust their build-out plans in order to accommodate these added Buy America requirements, which could result in delays in receipt of revenue from customers.

Similarly, regulations proposed and guidance issued by the U.S.

Department of the Treasury to implement domestic content, assembly and “foreign entity of concern” eligibility requirements to qualify for EV tax credits passed in the Inflation Reduction Act 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.

In addition to NEVI funding, which has been made available to every state department of transportation to administer grant programs to support the deployment of charging infrastructure, a number of states also offer various rebates, grants and tax credits to incentivize both EV and EVSE purchases.

Additionally, in many states, utilities offer rebates or other incentive programs, typically called “make-ready” programs, to incent the development of EV charging infrastructure .

Key Components of Results of Operations

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.

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

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

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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.

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.

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.

Charging Network .

Charging network cost of sales consists primarily of energy usage fees, site operating and maintenance expenses, network charges, warranty and repair services, and site lease and related expenses associated with charging stations.

Other cost of sales is primarily related to costs associated with the eXtend business and the sale of data services and other ancillary services.

Depreciation, Net of Capital-Build Amortization.

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Gross Profit (Loss) and Gross Margin

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

Gross profit (loss) consists of EVgo’s revenue less its total cost of sales.

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

Operating Expenses

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.

General and Administrative.

General and administrative expenses primarily consist of payroll and related personnel expenses, IT and office services, customer service, 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.

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Operating Profit (Loss) and Operating Margin

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 profit (loss) consists of EVgo’s gross profit (loss) less total 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 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

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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.

For the years ended December 31, 2023 and 2022, EVgo’s provision for income taxes and effective tax rate were deemed to be de minimis.

As of December 31, 2023 and 2022, EVgo maintained a full valuation allowance on EVgo’s net deferred tax assets.

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EVgo management uses several performance metrics to manage the business and evaluate financial and operating performance:

EVgo considers the following indicators to be of critical importance:

Network Throughput

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

Network Throughput on the EVgo Network

Network throughput represents the total amount of GWh consumed by EVs using chargers and charging stations that EVgo has operational on its network (excluding eXtend chargers and charging stations) (the “EVgo Network”).

EVgo typically monitors GWh sales by three components:

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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 (energized, inspected and commissioned).

Number of DC Stalls on the EVgo Network

Number of DC stalls represents the total number of DC stalls (energized, inspected and commissioned) on the EVgo Network (“DC Stalls”).

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.

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.

The following table presents network throughput and the number of DC stalls on the EVgo Network:

Network throughput (GWh) for the years ended

Number of DC Stalls on the EVgo Network (in thousands) as of

Factors Affecting EVgo’s Operating Results

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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.

increases in fuel efficiency;

regulations applicable to vehicle emissions and fuel economy;

and availability of federal and state credits for EV purchases.

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.

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Fleet owners are generally more sensitive to the total cost of ownership 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 ICE vehicles.

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 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, accessibility and reliability;

charger connectivity to EVs and ability to charge all standards;

speed of charging relative to expected vehicle dwell times at the location;

charger connectivity to EVs and ability to charge widely adopted standards;

speed of charging relative to expected vehicle dwell times at a location;

DCFC network reliability, scale and local density;

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operator brand, track record and reputation;

and access to equipment vendors and service providers;

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.

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.

If EVgo’s market share decreases due to increased competition, its revenue and ability to generate profits in the future may be impacted.

Government Mandates, Incentives and Programs

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.

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 and to otherwise financially support these industries.

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, EVgo has historically claimed federal tax credits under Section 30C of the Code.

The Inflation Reduction Act revised the eligibility criteria for these credits, and there can be no assurance that the EV charging stations placed into service by EVgo will meet the revised requirements, 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 EVs or EV charging stations could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

In addition, there is no assurance 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, 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.

See Part I, Item 1A, “Risk Factors — Risks Related to the EV Market — 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.

Technology Risks

EVgo relies on numerous internally developed and externally sourced hardware and software technologies to operate its network and generate earnings.

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

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

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.

For example, a majority of the largest OEMs have announced plans to adopt the NACS standard in their future EVs.

SAE International, a standards-developing organization for automotive engineering professionals, is currently working on an initiative to adapt Tesla’s specifications for NACS into the SAE J3400 industry standard.

EVgo has announced that it will be adding NACS connectors to its fast-charging network in 2025;

however, integrating NACS connectors in future charger installations and on certain existing chargers will require significant investment and management attention.

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

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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 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.

In addition to

current programs, EVgo is currently monitoring additional proposals related to potential LCFS programs in varying stages of discussions, including in New York, along with potential changes to the Renewable Fuels Standard.

Results of Operations

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The table below presents EVgo’s results of operations for the years ended December 31, 2023 and 2022:

Years Ended December 31,

Year Ended December 31,

(dollars in thousands)

Revenue from related party

Charging, retail

Charging, commercial

Charging, OEM

Regulatory credit sales

Total charging network

Total revenue

Cost of revenue

Cost of sales

Charging network 1

Depreciation, net of capital-build amortization

General and administrative expenses

Total cost of sales

Gross profit (loss)

Operating expenses

General and administrative

Depreciation, amortization and accretion

Total operating expenses

Operating loss

Interest expense

Interest expense, related party

Interest income

Other (expense) income, net

Other expense, net

Change in fair value of earnout liability

Change in fair value of warrant liability

Change in fair value of warrant liabilities

Loss before income tax expense

3 unchanged sentences

Operating margin

Network throughput (GWh)

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:

Years Ended December 31,

(dollars in thousands)

Charging revenue, retail

Charging revenue, commercial

Charging revenue, OEM

Regulatory credit sales 1

Network revenue, OEM

eXtend revenue

Ancillary revenue 2

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.

Network throughput (GWh) on the EVgo Network

Number of DC Stalls on the EVgo Network (in thousands) as of

1 The Company has changed the presentation of cost of sales to disaggregate such costs between “charging network” and “other.” Previously reported amounts have been updated to conform to the current presentation.

* Percent not meaningful.

Total revenue for the year ended December 31, 2023 increased $106.4 million, or 195%, to $161.0 million compared to $54.6 million for the year ended December 31, 2022.

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.

As further discussed below, the increase in revenue during 2023 was primarily due to a $53.9 million increase in eXtend revenue, a $26.8 million increase in retail charging revenue, an $11.1 million increase in commercial charging revenue, and a $6.0 million increase in ancillary revenue.

Charging Revenue, Retail.

Charging revenue, retail, for the year ended December 31, 2023 increased $26.8 million, or 142%, to $45.7 million compared to $18.9 million for the year ended December 31, 2022.

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.

Year-over-year growth was primarily due to an overall increase in throughput driven primarily by increased charging volume from a greater number of customers and more throughput per customer.

Charging Revenue, Commercial.

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, commercial, for the year ended December 31, 2023 increased $11.1 million, or 331%, to $14.5 million compared to $3.4 million for the year ended December 31, 2022.

Year-over-year growth was primarily due to higher charging volumes by the Company’s public fleet customers.

Charging Revenue, OEM.

Charging revenue, OEM, for the year ended December 31, 2023 increased $4.2 million, or 451%, to $5.2 million compared to $0.9 million for the year ended December 31, 2022.

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

The increase was primarily due to higher charging volumes and customer enrollments from the Company’s OEM partners.

Regulatory Credit Sales.

Regulatory credit sales for the year ended December 31, 2023 increased $1.0 million, or 18%, to $6.7 million compared to $5.7 million for the year ended December 31, 2022.

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.

The increase was primarily due to increased throughput resulting in additional credit generation, partially offset by a decrease in market prices.

Network Revenue, OEM.

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.

Network revenue, OEM, for the year ended December 31, 2023 increased $3.2 million, or 132%, to $5.7 million compared to $2.5 million for the year ended December 31, 2022.

The year-over-year increase was primarily due to increased breakage associated with prepaid charging credits and increased branding and marketing activities.

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.

eXtend revenue for the year ended December 31, 2023 increased $53.9 million, or 292%, to $72.4 million compared to $18.4 million for the year ended December 31, 2022.

The increase was primarily due to an increase in equipment sales and an increase in projects in process or completed compared to the same prior year period.

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 a $2.1 million increase in PlugShare revenue.

Ancillary revenue for the year ended December 31, 2023 increased $6.0 million, or 123%, to $10.8 million compared to $4.8 million for the year ended December 31, 2022.

The increase was primarily due to increased revenue from engineering and construction revenue, equipment sales, and PlugShare.

Cost of Sales

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 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.

Charging Network.

Charging network cost of sales for the year ended December 31, 2023 increased $29.5 million, or 111%, to $56.0 million compared to $26.5 million for the year ended December 31, 2022.

The increase was primarily due to a $21.4 million increase in usage-related energy costs resulting from increased throughput, a $3.9 million increase in site lease and related expenses, and a $2.9 million increase in maintenance costs.

Other cost of sales for the year ended December 31, 2023 increased $48.4 million, or 324%, to $63.4 million compared to $14.9 million for the year ended December 31, 2022.

The increase was primarily due to a $44.7 million increase in costs to support eXtend revenue, a $1.8 million increase in costs to support engineering and construction revenue, and a $1.4 million increase in costs for higher equipment sales.

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, 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.

Depreciation, net of capital-build amortization, for the year ended December 31, 2023 increased $13.1 million, or 70%, to $31.9 million compared to $18.8 million for the year ended December 31, 2022 due to the growth of EVgo’s charging network.

Gross Profit (Loss) and Gross Margin

Gross profit for the year ended December 31, 2023 was $9.7 million compared to a gross loss of $5.7 million for the year ended December 31, 2022 primarily due to improved gross profit from the charging network and eXtend revenue, partially offset by increased depreciation, net of capital-build amortization.

Gross margin for the year ended December 31, 2023 improved to 6.0% compared to negative 10.4% for the year ended December 31, 2022 primarily due to improved leveraging of charging station costs, resulting in higher gross margin on charging network revenue, partially offset by the impact of lower LCFS prices.

Operating Expenses

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General and administrative expenses for the year ended December 31, 2023 increased $16.3 million, or 13%, to $143.0 million compared to $126.7 million for the year ended December 31, 2022.

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.

The increase was primarily driven by an $11.9 million increase in payroll expenses due to higher compensation paid to employees during the year and the impact of increased average headcount compared to the same prior-year period, a $3.1 million increase in impairment expense due to increased write-offs of abandoned projects, and a $1.0 million increase in rent expense for pre-operational sites.

Depreciation, Amortization and Accretion.

Depreciation, amortization and accretion expenses for the year ended December 31, 2023 increased $3.0 million, or 17%, to $20.1 million compared to $17.1 million for the year ended December 31, 2022.

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.

The increase was primarily due to higher amortization related to software.

Operating Loss and Operating Margin

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.

During the year ended December 31, 2023, EVgo had an operating loss of $153.4 million, a deterioration of $3.9 million, or 3%, compared to an operating loss of $149.5 million for the year ended December 31, 2022.

Operating margin for the year ended December 31, 2023 was negative 95.3% compared to negative 273.9% for the year ended December 31, 2022 primarily due to improved leveraging of operating expenses and improved gross margins.

Interest Expense

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

There was no interest expense for the year ended December 31, 2023.

Interest Expense, Related Party

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.

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

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.

Interest income for the year ended December 31, 2023 increased $5.3 million, or 118%, to $9.8 million compared to $4.5 million for the year ended December 31, 2022.

The increase was a result of more cash and cash equivalents held in a high interest rate account by the Company during the year ended December 31, 2023 compared to the prior year.

Other Expense, Net

Other expense, net, for the year ended December 31, 2023 was de minimis compared to $0.8 million for the year ended December 31, 2022.

The change was primarily due to decreased realized losses on the sale of investments compared to the prior year.

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.

The changes in fair values of earnout and warrant liabilities for the year ended December 31, 2023 were gains of $1.1 million and $7.2 million, respectively, compared to gains of $3.5 million and $36.2 million, respectively, for the year

ended December 31, 2022.

The change between years was primarily due to a smaller decrease in the fair value of the warrant and earnout liabilities during the year ended December 31, 2023 compared to the prior year.

See Part II, Item 8, “Consolidated Financial Statements and Supplementary Data — Note 12 — Fair Value Measurements ” for more information.

Income Tax Expense

For the years ended December 31, 2023 and 2022, income tax expense was de minimis due to the full valuation allowance on the Company’s net deferred tax assets.

Net loss for the year ended December 31, 2023 was $135.5 million compared to $106.2 million for the year ended December 31, 2022.

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.

The increased loss was primarily due to $31.4 million in decreased gains from the change in the fair values of the earnout and warrant liabilities and $16.3 million in increased general and administrative expenses incurred to support growth, which were partially offset by a $15.4 million increase in gross profit and a $5.3 million increase in interest income.

Non-GAAP Financial Measures

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

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.

“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,” “Adjusted EBITDA Margin,” and “Capital Expenditures, Net of Capital Offsets.” With respect to Capital Expenditures, Net of Capital Offsets, pursuant to the terms of certain OEM contracts, EVgo is paid well in advance of when revenue can be recognized, and usually, the payment is tied to the number of stalls that commence operations under the applicable contractual arrangement while the related revenue is deferred at the time of payment and is recognized as revenue over time as EVgo provides charging and other services to the OEM and the OEM’s customers.

EVgo management therefore uses these measures internally to establish forecasts, budgets, and operational goals to manage and monitor its business, including the cash used for, and the return on, its investment in its charging infrastructure.

EVgo believes that these measures are useful to investors in evaluating EVgo’s performance and help to depict a 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, Adjusted EBITDA Margin and Capital Expenditures, Net of Capital Offsets 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.

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 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.

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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 general and administrative expenses before (i) share-based compensation, (ii) loss on disposal of property and equipment, net of insurance recoveries, and impairment expense, (iii) bad debt expense (recoveries), 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 as EBITDA plus (i) share-based compensation, (ii) loss on disposal of property and equipment, net of insurance recoveries, and impairment expense, (iii) loss on investments, (iv) bad debt expense (recoveries), (v) change in fair value of earnout liability, (vi) change in fair value of warrant liabilities, 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:

EVgo defines Capital Expenditures, Net of Capital Offsets as capital expenditures adjusted for the following capital offsets:

(i) all payments under OEM infrastructure agreements excluding any amounts directly attributable to OEM customer charging credit programs and pass-through of non-capital expense reimbursements, and (ii) proceeds from capital-build funding.

The tables below present quantitative reconciliations of these measures to their most directly comparable GAAP measures as described in this paragraph.

(dollars in thousands)

GAAP cost of sales

GAAP gross loss

GAAP gross profit (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

Total adjustments

Adjusted Cost of Sales

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Adjusted Gross Margin

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)

1 unchanged sentence

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

Loss on disposal of property and equipment, net of insurance recoveries, and impairment expense 1

Bad debt expense (recoveries)

Total adjustments

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:

1 During the year ended December 31, 2023, the Company reclassified insurance proceeds from property losses from “other” to “loss on disposal of property and equipment, net of insurance recoveries, and impairment expense.” Previously reported amounts have been updated to conform to the current period presentation.

2 For the year ended December 31, 2023, comprised primarily of costs related to the reorganization of Company resources previously announced by the Company on February 23, 2023, the petition filed by EVgo in the Delaware Court of Chancery in February 2023 seeking validation of EVgo’s charter and share structure (the “205 Petition”), and employee retention tax credits (“ERCs”) earned under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The following unaudited table presents a reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to the most directly comparable GAAP measure:

(dollars in thousands)

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Interest expense

Interest expense, related party

Income tax expense

1 unchanged sentence

Share-based compensation

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

Loss (gain) on investments

Bad debt (recovery) expense

Loss on disposal of property and equipment, net of insurance recoveries, and impairment expense 1

Loss on investments

Bad debt expense (recoveries)

Change in fair value of earnout liability

Change in fair value of warrant liability

Change in fair value of warrant liabilities

Total adjustments

Adjusted EBITDA

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.

The following unaudited table presents a reconciliation of Capital Expenditures, Net of Capital Offsets, to the most directly comparable GAAP measure:

(dollars in thousands)

Capital expenditures

Capital offsets:

OEM infrastructure payments

Proceeds from capital-build funding

Total capital offsets

Capital Expenditures, Net of Capital Offsets

Liquidity and Capital Resources

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As of December 31, 2023, EVgo had $209.1 million of cash, cash equivalents, and restricted cash and working capital of $178.1 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.

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

The Company’s net cash outflow for the year ended December 31, 2023 was $37.3 million.

EVgo believes its cash and cash equivalents on hand as of December 31, 2023 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.

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, including under the ATM Program and an underwritten equity offering, and loans and equity contributions from its previous owners.

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

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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 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;

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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.

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.

Any such deferred payments under the Tax Receivable Agreement generally will accrue interest at the rate provided for in the Tax Receivable Agreement and such interest may significantly exceed the Company Group’s other costs of capital.

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Year Ended December 31, 2023 Compared with Year Ended December 31, 2022

Years Ended December 31,

Year Ended December 31,

(in thousands)

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Cash flows provided by financing activities

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

Net decrease in cash, cash equivalents and restricted cash

Operating Activities.

Cash used in operating activities for the year ended December 31, 2023 was $37.1 million compared to cash used in operating activities of $58.8 million during the year ended December 31, 2022.

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.

This year-over-year change primarily reflected a $25.4 million increase in cash flows from its operations, a $25.2 million increase in cash flows from deferred revenue and a $2.0 million increase in cash flows from operating lease assets and liabilities, net, partially offset by a $15.3 million decrease in cash flows from accounts receivable, net, a $14.9 million decrease in cash flows from customer deposits, and a $1.5 million decrease in cash flows from receivables from related parties.

Investing Activities.

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.

Cash used in investing activities for the year ended December 31, 2023 was $143.3 million, compared to $199.7 million for the year ended December 31, 2022.

The decrease was primarily driven by a $41.4 million decrease in capital expenditures and investments compared to the prior year, partially offset by $15.3 million in net proceeds received from sale-leaseback transactions during the year ended December 31, 2023.

Financing Activities .

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.

Cash provided by financing activities for the year ended December 31, 2023 was $143.0 million compared to $19.8 million for the year ended December 31, 2022.

The increase was driven primarily by the receipt of $128.0 million in proceeds from the issuance of Class A common stock in the Company’s underwritten equity offering during 2023 and a $4.3 million increase in proceeds received from capital-build funding, partially offset by $4.8 million decrease in proceeds from the issuance of Class A common stock under the Company’s ATM Program and a $4.1 million increase in equity issuance costs during the year ended December 31, 2023.

Working Capital .

EVgo’s working capital as of December 31, 2023 was $178.1 million, compared to $188.1 million as of December 31, 2022.

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.

The decrease was driven primarily by a $37.0 million decrease in the Company’s cash, cash equivalents and restricted cash, a $7.1 million increase in deferred revenue, current, and a $1.3 million increase in accrued liabilities, partially offset by a $23.8 million increase in accounts receivable, net, an $8.6 million decrease in customer deposits, and a $3.9 million increase in prepaid expenses and other current assets.

Contractual Obligations and Commitments.

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

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 11 — 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.

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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.

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.

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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”).

Recording revenue may require 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.

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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

Business combinations are accounted for using the acquisition method of accounting and accordingly, the assets and liabilities of the acquired business are recorded at their respective fair values.

The excess of the purchase price over the estimated fair value is recorded as goodwill.

Assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires knowledge of current market values and the values of assets in use and often requires the application of judgment regarding estimates and assumptions.

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, 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.

Warrant Liability

Impairment of Goodwill and Other Identified Intangible Assets

The Company has one reporting unit and performs its annual goodwill impairment testing on October 1 each year.

In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances between annual impairment testing dates, the Company considers all available evidence, including (i) the results of impairment testing from the most recent testing date (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts, decreases in market multiples (and the magnitude thereof) or changes to interest rates, if any, and (iii) declines in market capitalization below book value (and the magnitude and duration of those declines), if any.

The Company determines fair value using the market approach, when available and appropriate, or the income approach, or a combination of both and assesses the valuation methodology based upon the relevance and availability of the data at the time the valuation is performed.

If multiple valuation methodologies are used, the results are weighted appropriately.

Valuations using the market approach are derived from metrics of publicly traded companies or historically completed transactions of comparable businesses.

The selection of comparable businesses is based on the markets in which the Company operates giving consideration to risk profiles, size, geography, and diversity of products and services.

A market approach is used if there are publicly traded companies that have characteristics similar to EVgo’s business.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.

The Company uses its internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on the most recent views of the long-term outlook for the business.

Discount rates are derived using a capital asset pricing model and analyzing published rates for relevant industries to estimate the cost of equity financing.

The discount rates used are commensurate with the risks and uncertainty inherent in EVgo’s business and in its internally developed forecasts.

Estimating the fair value of the reporting unit requires the use of significant judgments that are based on a number of factors including actual operating results, internal forecasts, market observable pricing multiples of similar businesses and comparable transactions, possible control premiums, determining the appropriate discount rate and long-term growth rate assumptions, and, if multiple approaches are being used, determining the appropriate weighting applied to each approach.

It is reasonably possible that the judgments and estimates described above could change in future periods.

The Company reviews identified intangible assets with defined useful lives and subject to amortization for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

Determining whether an impairment loss has occurred requires the use of internal forecasts to estimate future cash flows and the useful life over which these cash flows will occur.

To determine fair value, the Company uses its internal cash flow estimates discounted at an appropriate discount rate.

Warrant Liabilities

EVgo accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).

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For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter.

Changes in the estimated fair value of the warrants are recognized in “changes in fair value of warrant liability” in the consolidated statements of operations.

The fair value of the private placement warrants on the date of issuance and on each measurement date is estimated using a Monte Carlo simulation methodology, which includes inputs such as EVgo’s stock price, the risk-free interest rate, the expected term, the expected volatility, the dividend rate, the exercise price and the number of private placement warrants outstanding.

Assumptions used in the model are subjective and require significant judgment.

Changes in the estimated fair value of the warrants are recognized in “changes in fair value of warrant liabilities” in the consolidated statements of operations.

The fair value of the Private Placement Warrants on the date of issuance and on each measurement date is estimated by reference to the trading price of the public warrants, which is considered a Level 2 fair value measurement, or using a Monte Carlo simulation methodology, which is considered a Level 3 fair value measurement and includes inputs such as EVgo’s stock price, the risk-free interest rate, the expected term, the expected volatility, the dividend rate, the exercise price and the number of Private Placement Warrants outstanding.

Assumptions used in the Monte Carlo model are subjective and require significant judgment.

Recent Accounting Pronouncements

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.

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, 2023 and 2022.

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

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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.

non-affiliates is less than $700 million.

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.

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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