Shares of charging company EVgo (EVGO) soared on Thursday as revenue jumped over 280% year over year, offering some respite for investors who suffered through a rough 2022.
While 2023 has gotten off to a strong start, EVgo is still unprofitable, and investors betting on the company are looking for any sign that EVgo, and charging networks in general, are poised to explode in growth.
Part of that growth is coming from government resources, namely the White House’s $7.5 billion EV charger buildout, focused on the national highway system and rural areas. The plan aims to have 500,000 new chargers online by 2030; however research firms have said the country will needs millions by then.
“What's clever about the policy initiatives is that they are building a bridge between when there are enough EVs to have this be completely sustainable,” EVgo CEO Cathy Zoi said in an interview with Yahoo Finance. EVgo is also one of the many partners the White House is using to build out the national network.
Government money can be a catalyst to create growth of a nascent system, particularly with infrastructure, in this case a charging network. “So it's in the early moments that government policy, government incentives can help build that bridge for capital markets to create that confidence, to invest in this infrastructure, that will be absolutely essential going forward,” she says.
The percentages of EV sold last year rose to 6%, double the year before. Zoi is confident that as the White House plan unfolds, and the critical mass of EVs start to enter the roads, much more private money and investment will come in.
When asked whether the U.S. will see EV chargers as commonplace as gas stations, Zoi said the country is not there yet, but it's coming. "We're on that trajectory now; EVgo and others, we're all building right now to satisfy demand.
EVgo and Zoi believe there are a few perfect locations for EV charging outside the home, and the company wants to capitalize on those opportunities.
“Grocery store parking lots, big box stores, municipal parking lots that are near a bunch of other convenient things, parks where your kids are going to go play because you're going to spend somewhere between 15 and 30 minutes charging your EV,” she says. “So we love being near those amenities and that's where most of our metropolitan chargers are located today.”
One important partnership the company is focusing on is its deal with Pilot Flying J (BRK-A), to install chargers at its highway rest stops and travel centers. Working with GM (GM), EVgo will install 2,000 charging stalls at Pilot and Flying J locations. EVgo ended Q4 with 2,800 stalls in operation or under construction, so the deal with Pilot Flying J would see boost its footprint by over 70%.
“Most Americans live within a short distance of a Pilot Flying J if they live near a highway, and so us being able to electrify those is going to improve their confidence in being able to buy an EV and go on a big road trip,” Zoi says. “We love that partnership.”
Now while the government does giveth, it does taketh in some ways. One big area is the requirement that chargers using federal money must be made in the U.S. and most components coming from the U.S. by 2024. This is problematic for many companies sourcing products and components from overseas.
EVgo says this may hit 2023 growth, but it shouldn’t be material — yet.
“We're deploying ultra-fast chargers that, at the moment, nobody makes them in America,” she says, but two suppliers that EVgo is currently using have factories under construction in the U.S.
What may end up happening, Zoi says, is the company may push some of those fast chargers to 2024, when U.S.-built chargers are available, from 2023’s buildout plan.
“It's not a material change, but there will likely be a slowdown in 2023 for things that actually get built, given the new guidelines that have come out from the federal government.”
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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