EVgo

EVgo is one of the largest public fast-charging networks for electric vehicles (EVs) in the United States. The company's core business is owning and operating a network of high-power DC fast chargers, which are significantly quicker than the more common Level 2 chargers and can typically add hundreds of miles of range in under an hour. A key differentiator for EVgo is its commitment to powering its network with 100% renewable electricity, appealing to environmentally conscious drivers. The company went public in 2021 through a merger with a SPAC (Special Purpose Acquisition Company) and trades on the Nasdaq under the ticker symbol EVGO. Unlike some competitors who focus on selling hardware or software, EVgo's primary model is direct-to-consumer, generating revenue by selling electricity to EV drivers at its stations. This positions it as a direct bet on the growth of EV adoption and the increasing need for convenient, public charging infrastructure.

At its heart, EVgo is an infrastructure and energy retail company. Its business model revolves around building, owning, and operating charging stations in high-traffic, convenient locations like grocery stores, shopping malls, and gas stations. This “site host” model is symbiotic: EVgo gets prime real estate, and the host business benefits from increased foot traffic as drivers wait for their cars to charge. Revenue comes from several streams:

• Pay-As-You-Go: The most straightforward source, where drivers pay for each charging session.
• Subscription Plans: EVgo offers membership plans (like EVgo Plus) that provide lower per-kilowatt-hour rates in exchange for a small monthly fee, encouraging customer loyalty.
• OEM Partnerships: EVgo has strategic partnerships with automakers like GM and Nissan. These deals often include programs that offer new EV buyers a certain amount of free charging on the EVgo network, creating a built-in customer base.
• Fleet Services: The company partners with rideshare giants like Uber and Lyft, as well as other commercial fleets, to provide charging solutions for their drivers.

Investing in EVgo is a bet on the future of transportation. It's a high-growth story with significant potential, but it also comes with substantial risks that every value-oriented investor must carefully consider.

For optimists, EVgo is perfectly positioned to capitalize on one of the biggest economic shifts of our time—the transition from internal combustion engines to electric vehicles.

• Huge Secular Tailwinds: Governments worldwide are pushing for electrification through subsidies and regulations. As millions of new EVs hit the road, the demand for public fast charging is set to explode.
• A Nascent Economic Moat: While the industry is young, EVgo is building a potential economic moat through network effects. A larger, more reliable network attracts more drivers, which in turn provides the revenue and data to build out the network even further. Securing the best locations first also creates a barrier to entry.
• Strategic Partnerships: Collaborations with major automakers and fleets provide a sticky, recurring customer base and de-risk the initial customer acquisition phase.
• Pure-Play Exposure: EVgo offers a direct investment in EV infrastructure, a critical and non-negotiable component of the EV ecosystem.

For skeptics, the path forward is littered with obstacles. The excitement around EV growth can obscure the difficult unit economics and fierce competition in the charging space.

• Intense Competition: The EV charging market is incredibly crowded. EVgo competes directly with well-funded rivals like Electrify America and ChargePoint, as well as the formidable Tesla Supercharger network, which is increasingly opening up to non-Tesla vehicles.
• Crushing Capital Intensity: Building and maintaining a nationwide network of high-tech chargers requires enormous and continuous capital expenditure (CapEx). This constant need for cash can be a major drag on financials for years to come.
• The Elusive Path to Profitability: EVgo is not yet profitable. The core question for investors is when—or if—the company can reach a scale where its revenue outpaces its high fixed costs and ongoing investments. Achieving sustainable profitability and positive free cash flow is the ultimate test.
• Low Utilization Rates: The profitability of a charging station is highly dependent on its utilization rate—the percentage of the day it is actively charging a vehicle. In these early stages of EV adoption, many stations are underutilized, making it difficult to earn a good return on the capital invested.

EVgo represents a classic high-risk, high-reward growth investment. It is a pure-play on the essential infrastructure needed to power the electric revolution. The investment thesis hinges on the belief that the powerful wave of EV adoption will eventually lift the company to profitability, allowing it to overcome the challenges of intense competition and high capital requirements. For a value investor, this means looking past the current losses and trying to determine if a durable, cash-generating business will emerge in the future. As with any investment in a rapidly evolving industry, thorough due diligence is paramount.