EVgo Celebrates Record Q3 Growth, Powered in Part by Federal Funds

In its Q3 earnings call, EVgo reported a record $68 million in revenue, driven by a dramatic 100% increase in energy dispensed. The company also saw substantial growth in its operational network, increasing charging stalls by 34% and reaching new milestones, such as opening its first station in its 40th state and growing its customer accounts by 60%.

"There is a clear path to profitability and achieving our goal of adjusted EBITDA breakeven in 2025," EVgo CEO Badar Khan said. EVgo has also grown its operational stalls by 34%, bringing its network closer to its target of more than 800 new stalls for 2024.

The continued expansion of its network positions EVgo as a key player in the U.S. EV charging infrastructure landscape. The company expects to add over 800 new charging stalls this year and aims to reach 7,500 additional high-powered charging stalls over the next five years, partly funded by a conditional loan guarantee of up to $1.05 billion from the U.S. Department of Energy (DOE).

Tesla and the future of NACS integration

Another notable aspect of EVgo's future growth is the coming integration of Tesla’s NACS connector. Although Tesla drivers currently make up a small portion of EVgo’s network, Khan expressed optimism that this will change once the NACS connector is finalized and widely available. "Once we have the NACS connector, the J3400 standard, finalized, properly tested, which we're hoping for the end of the year... I expect to be able to attract roughly 60% of EV VIO that is not primarily charging in our network, to start charging in our network," Khan said.

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EVgo’s ability to attract more Tesla drivers is seen as an important growth opportunity for the company, particularly as the market shifts toward mass adoption of electric vehicles. “Our network is more of an urban network. It’s closer to where people live, work, they run their errands, versus a highway network, which is a large part of what Tesla is,” Khan said.

A woman uses a NACS connector at an EVgo charging station Credit: EVgo Services LLC

Significance of federal funding

While EVgo is making strides in growth, the company’s dependence on government support is a critical aspect of its business strategy. In particular, Khan highlighted how the company is leveraging federal incentives like the 30C tax credit from the IRA and the NEVI program to fund its infrastructure projects. "Federal incentives include the 30C and NEVI represent approximately 10% of our full-year 2024 gross CAPEX," Khan noted.

Khan also addressed the potential implications of the incoming second Trump administration and the future of these incentives. Despite the shifting political landscape, he expressed confidence that the key programs supporting EV infrastructure would continue. "I see little to no impact on our business relative to the illustrative targets that we've previously communicated for $200 million in adjusted EBITDA in three to five years’ time," Khan said. "The cost of the 30C tax credit is quite small and is estimated to represent between 0.1% and 0.2% of the total cost of the IRA energy provisions."

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However, he also argued that EVgo is not overly reliant on these federal incentives for its future success. "Either way, we are focused on building a business that is not reliant on Federal incentives," Khan said. This assertion reflects EVgo’s broader strategy to reduce its dependence on federal support in the long term.

EVgo CEO Badar Khan Credit: EVgo Services LLC

The DOE loan and accelerated growth

A significant development for EVgo is the conditional commitment for a $1.05 billion loan guarantee from the DOE, which will enable the company to rapidly scale its fast-charging infrastructure. If finalized, this loan will allow EVgo to deploy 7,500 high-powered charging stalls across 30 states, with over 40% of the new stalls located in marginalized areas.

Khan spoke about the potential impact of the loan, noting that it would increase EVgo’s annual stall growth rate and improve unit economics. "A potential accelerated build-up bolstered by DOE financing would allow us to increase our current 200 million adjusted EBITDA target in three to five years," Khan said. "This is a major strategic milestone towards our goal or providing the company with ongoing financing that eventually will more than double our annual rate of stall growth."

Related:These 11 EV Makers & Charging Networks Will Use Tesla NACS Connector

With over 50% of its stalls expected to be deployed in rural or low-income communities, the DOE loan aligns with the Biden administration’s Justice 40 initiative. "Given that over 50% of the stalls we’re deploying in 2024 are in rural or low-income communities eligible for 30C funding, I expect no change in the unit economics and growth in daily throughput per stall we’ve previously shared other than benefiting from even larger scale," Khan explained.

Government and industry, going forward

EVgo’s earnings report highlights a company that is growing rapidly, with impressive metrics and a clear strategy for scaling its charging infrastructure. However, the company’s future success remains closely linked to government programs and funding, which provide a substantial portion of its capital expenditure. As EVgo continues to expand its network and integrate new technologies like NACS, the potential impact of the DOE loan and ongoing federal support will be critical to its long-term trajectory.

That puts in in good company: The US EV and battery industries have seen a boom in investment and growth that arguably began beforehand but really took off after the 2022 passage of the Inflation Reduction Act, and all of these companies have benefited from a government that actively supports the industries’ domestic goals. They all are banking on president-elect Donald Trump not being true to his past rhetoric and instead doing little to interfere with the government’s pro-industry incentives. That would be the more prudent, business-savvy course for the new administration to take. We’ll see what happens.