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Item 1A. Risk Factors

2023-08-02 compared with 2023-05-09 · 40 added, 2 removed, 8 unchanged (84% of the section changed)

1 unchanged sentence

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

Before you make a decision to buy EVgo’s securities, in addition to the risks and uncertainties discussed above under “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the specific risk factors set forth in the “Risk Factors” section in the Annual Report.

There have been no material changes to the risk factors disclosed in Part I, Item 1A of the Annual Report.

The current lack of industry standards may lead to uncertainty, additional competition and further unexpected costs.

The EV industry is new and evolving as are the standards governing EV charging which have not had the benefit of time-tested use cases.

These immature industry standards could result in future incompatibilities and issues that could require significant resources and/or time to remedy.

Utilities and other large market participants also mandate their own adoption of specifications that have not become widely adopted in the industry and may hinder innovation or slow new product or new feature introduction.

In addition, automobile manufacturers, such as Tesla, may choose to develop and promulgate their own proprietary charging standards and systems, which could lock out competition for EV charging stations, or to use their size and market position to influence the market, which could limit EVgo’s market and reach to customers, negatively impacting EVgo’s business.

Further, should regulatory bodies or large market participants later impose a standard that is not compatible with EVgo’s infrastructure or products, EVgo may incur significant costs to adapt EVgo’s business model to the new standard, which may require significant time and expense and, as a result, have a material adverse effect on EVgo’s revenues or results of operations.

For example, Tesla’s charging network is based on a proprietary connector and EV inlet, which Tesla has open sourced as the North American Charging Standard (“NACS”) to supplant or replace competing connector and EV inlet standards such as the combined charging system (“CCS”).

In recent months, a number of OEMs, including Ford, GM, Rivian, Volvo and Mercedes, 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 an industry standard.

The rapid industry shift towards the NACS standard demonstrates the ongoing evolution of industry standards.

With the recent OEM announcements, NACS is poised to potentially become the de facto charging standard for EVs in North America.

However, widespread or universal adoption of NACS as the industry standard could take at least five years as OEMs develop new EVs and EVSE manufacturers develop new chargers based on the NACS standard.

Additionally, because a change in industry standard requires updates to a range of charging equipment, including EV inlets and EVSE connectors, cables and cooling systems, charging network operators, including EVgo, may have to spend considerable time and resources to deploy the new chargers (or retrofit existing chargers) in a manner that supports migration of EVs in North America from the CCS1 standard to the NACS standard while ensuring that existing EVs featuring CCS1 charging equipment are able to charge effectively on the updated networks.

EVgo currently faces competition from a number of companies and expects to face significant competition in the future as the market for EV charging develops.

The EV charging market is relatively new, and EVgo currently faces competition from a number of companies.

There are a number of established and emerging EV charging companies operating in the U.S.

that pursue various business models that are constantly evolving, including Electrify America, Blink, ChargePoint, Shell Recharge Solutions (formerly Greenlots and Volta), Tesla, Tritium, IoTecha, Borg Warner (formerly Rhombus), BP, Voltera, TerraWatt and Flo as well as certain utilities and retailers.

Additionally, in July 2023, a number of OEMs, including BMW, GM, Honda, Hyundai, Kia, Mercedes-Benz and Stellantis announced plans to form a joint venture to build a large EV charging network in North America.

EVgo competes (or, in the future, may compete) with some or all of these companies and other competitors across a number of industry segments, including retail and fleet.

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;

DCFC network reliability, scale and local density;

the software-enabled services offered and overall customer experience;

operator brand, track record and reputation;

access to equipment vendors, and service providers;

and policy incentives and pricing.

Competitors may be able to respond more quickly and effectively than EVgo to new or changing opportunities, technologies, standards or customer requirements and may be better equipped to initiate or withstand substantial price competition.

Additionally, historically EVgo has generated a significant portion of its revenue from agreements with OEM partners, and the loss of one or more of these OEM partners as a result of such partners investing in their own EV charging networks (or another EV charging network in which they participate) could adversely affect EVgo’s business and results of operations.

In addition, there are other means for charging EVs, which could affect the level of demand for charging at EVgo’s DCFCs.

For example, Tesla Inc.

(“Tesla”) continues to build out its supercharger network across the U.S.

for Tesla vehicles and has announced plans to open up a portion of its supercharger network to non-Tesla EV vehicles.

Also, other companies sell chargers designed for customers seeking to have on-premises EV charging capability as well as for home or workplace charging, which may reduce the demand for fast charging if EV owners find “slow” charging at a workplace, at home, or other parking locations to be sufficient.

Municipalities may decide to convert street lighting poles and lampposts to public charging points for EV drivers who rent, have no access to home charging, or park their EVs on the street, potentially reducing EVgo’s serviceable markets.

Retailers, utilities or other Site Hosts or commercial, municipal and federal fleet businesses may opt to become owners and operators of public or private EV fast charging equipment and purchase that equipment and associated management software directly from vendors in the marketplace.

The EV charging business may become more competitive, pressuring demand for charging on EVgo’s charging network and therefore EVgo’s network utilization, revenue and margins.

Competition is still developing and is expected to increase as the number of EVs sold increases.

Barriers to entry in the EV charging market have eroded, and may continue to erode, as a result of government intervention and various support programs, leading to more competitors with a variety of profitability objectives.

Unregistered Sales of Equity Securities and Use of Proceeds

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What changed 10-Q

Item 1A. Risk Factors