EVgo (EVGO) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We are an early-stage growth company with a history of operating losses and expect to incur significant expenses and continuing losses at least for the near- and medium-term
2. 02Our growth and success are highly correlated with and thus dependent upon the continuing rapid adoption of and demand for EVs and OEMs’ ability to supply such EVs to the market
3. 03We have experienced rapid growth in recent periods. The expected continued growth and expansion of our business may place a significant strain on management, business operations, financial condition and infrastructure and corporate culture
4. 04Current and future administrations at the federal and state level may create uncertainty for the EV sector, which may have a material and adverse effect on our business, prospects, financial condition and results of operations
5. 05Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate
6. 06We currently face competition from a number of companies and expect to face significant competition in the future as the market for EV charging develops
7. 07We rely on a limited number of vendors for our charging equipment and related support services. A loss of any of these partners could materially and adversely affect our business, financial condition and results of operations
8. 08Because we are currently dependent upon a limited number of customers and OEM partners, the loss of a significant customer or OEM partner could materially and adversely affect our business, financial condition and results of operations
9. 09Our success and growth depend on our ability to develop and maintain relationships with automotive OEM and fleet partners
10. 10We are required to install a substantial number of chargers pursuant to the GM Agreement. If we do not meet our obligations under this agreement, we may not be entitled to payments from GM and may be required to pay liquidated damages, which may be significant
11. 11We are required to install a substantial number of chargers pursuant to the Pilot Infrastructure Agreement. If we do not meet our obligations under this agreement, we may not be entitled to payments from the Pilot Company and may be required to pay liquidated damages, which may be significant
12. 12We are committed to purchasing a large number of chargers under the Delta Charger Supply Agreement and Purchase Order, which will require significant capital expenditures, some of which may not be immediately offset by payments made pursuant to the Pilot Infrastructure Agreement
13. 13Our business is subject to risks associated with construction, cost overruns and delays and other contingencies that may arise in the course of completing installations, and such risks may increase in the future as we expand the scope of such services with other parties
14. 14Disruptions in our supply chain could materially and adversely affect our business, financial condition and results of operations
15. 15We may need to raise additional funds, and these funds may not be available when needed or may only be available on unfavorable terms, which could impact our ability to fund our operations, our growth and the build-out of our network
16. 16A failure of service by one or more of our key vendors, including third-party providers of software, technology, applications or communication services that we rely on, could materially and adversely affect our business, financial condition and results of operations
17. 17If we are unable to attract and retain key employees and hire qualified management, technical, engineering, financial, legal, sales, marketing and business development personnel, our ability to compete and successfully grow our business and customer base could be harmed
18. 18We are dependent upon the availability of electricity at our current and future charging stations. Cost increases, delays and/or other restrictions on the availability of electricity would materially and adversely affect our business, financial condition and results of operations
19. 19Our charging stations are often located in areas that are publicly accessible and may be exposed to vandalism or misuse by customers or other individuals, which would increase our replacement and maintenance costs
20. 20Some of our business objectives are dependent upon the purchase of RECs, and an increase in the cost of such certificates may adversely impact our business and results of operations
21. 21If we fail to offer high-quality support to Site Hosts or drivers or fail to maintain high charger availability and strong user experience, our business and reputation will suffer
22. 22We may acquire additional assets, products, technologies or businesses in the future, and would be subject to risks associated with completing and integrating such acquisitions

Risks Related to the DOE Loan

1. 23Our failure to comply with the covenants or other terms of the DOE Loan, including as a result of events beyond our control, could result in a default under the DOE Loan that could materially and adversely affect the ongoing viability of our business
2. 24The DOE Loan is secured by a substantial portion of our consolidated assets, resulting in the lack of substantial remaining assets available for incurring additional secured indebtedness
3. 25The restrictions imposed on the Borrower under the DOE Loan limit our flexibility in operating the business of the Borrower and could limit our flexibility in operating our business
4. 26We depend upon cash distributions from our subsidiaries, including the Borrower, to fund our operations, and restrictions on the Borrower’s ability to distribute cash to us under the DOE Loan could adversely affect our business plans

Risks Related to the EV Market

1. 27Changes to fuel economy standards or the success of alternative fuels may negatively impact the EV market and thus the demand for our products and services
2. 28We derive revenue from the sale of regulatory credits. There are a number of factors beyond our control that could have a material adverse effect on our ability to generate such revenue

Risks Related to Our Technology, Intellectual Property and Infrastructure

1. 29Our business, financial condition and results of operations may be materially and adversely affected if we are unable to maintain, protect and enforce our technology and intellectual property
2. 30We may need to defend against intellectual property infringement or misappropriation claims, which may be time-consuming and expensive and our business, financial condition and results of operations could be materially and adversely affected
3. 31The current lack of industry standards may lead to uncertainty, additional competition and further unexpected costs
4. 32We currently incur, and expect to continue to incur, research and development costs and devote significant resources to developing new products, which could significantly reduce our profitability and may never result in revenue to us
5. 33We may be unable to leverage customer data in all geographic locations, and this limitation may impact research and development operations

Risks Related to Finance, Tax and Accounting

1. 34Our financial condition and results of operations are likely to fluctuate on a quarterly basis in future periods, which could cause our results for a particular period to fall below expectations, resulting in a decline in the price of our common stock
2. 35Changes to applicable U.S. tax laws and regulations or exposure to additional income tax liabilities could materially and adversely affect our and EVgo OpCo’s business, financial condition and results of operations
3. 36Our or EVgo OpCo’s after-tax profitability and financial results may also be adversely affected by changes in relevant tax laws and tax rates, treaties, regulations, administrative practices and principles, judicial decisions and interpretations thereof, in each case, possibly with retroactive effect
4. 37Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could materially and adversely affect our business, financial condition and results of operations

Risks Related to Our “Up-C” Structure and the Tax Receivable Agreement

1. 38EVgo Holdings owns the majority of our voting stock and therefore has the right to appoint a majority of our board members, and EVgo Holdings’ interests may conflict with those of other stockholders
2. 39Our only principal asset is our interest in Thunder Sub, which, in turn, holds only units issued by EVgo OpCo; accordingly, we depend on distributions from EVgo OpCo and Thunder Sub to pay taxes, make payments under the Tax Receivable Agreement and cover our corporate and other overhead expenses
3. 40We will be required to make payments under the Tax Receivable Agreement for certain tax benefits that we may claim, and the amounts of such payments could be significant
4. 41of such EVgo OpCo Units that will be available to the Company Group as a result of its acquisition of such EVgo OpCo Units) and certain benefits attributable to imputed interest. The Company Group will retain the benefit of the remaining net cash savings, if any
5. 42In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, the Company Group realizes in respect of the tax attributes subject to the Tax Receivable Agreement
6. 43If the Company Group’s payment obligations under the Tax Receivable Agreement are accelerated upon certain mergers, other forms of business combinations or other changes of control, the consideration payable to holders of Class A common stock could be substantially reduced
7. 44We will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are subsequently disallowed

Risks Related to Legal Matters and Regulations

1. 45Privacy concerns and laws, or other regulations, may materially and adversely affect our business, financial condition and results of operations
2. 46comply with new regulations, which could subject us to penalties and enforcement actions. Additionally, we could be regulated as a retail electric service provider in the future
3. 47Increasing and evolving attention to ESG matters may increase our costs of compliance and materially and adversely impact our business, financial condition and results of operations
4. 48Failure to comply with anti-corruption laws and regulations, anti-money laundering laws and regulations, economic sanctions, and/or export control regulations could have an adverse impact on our business

Risks Related to Our Securities

1. 49We are a “controlled company” within the meaning of the rules of the Nasdaq and the rules of the SEC. As a result, we qualify for, and rely on, exemptions from certain corporate governance requirements that would otherwise provide protection to stockholders of other companies
2. 50Provisions in our Charter and Delaware law may have the effect of discouraging lawsuits against our directors and officers
3. 51Provisions in our Charter may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for Class A common stock and could entrench management
4. 52LS Power, non-employee directors and their affiliates are not limited in their ability to compete with us, and the corporate opportunity provisions in our Charter could enable such persons to benefit from corporate opportunities that might otherwise be available to us
5. 53The market price of our Class A common stock could be adversely affected by, and our stockholders may experience dilution as a result of, sales of substantial amounts of Class A common stock in the public or private markets, including sales by us, EVgo Holdings or other large holders
6. 54Because we have no current plans to pay cash dividends on Class A common stock for the foreseeable future, you may not receive any return on investment unless you sell Class A common stock for a price greater than that which you paid for it
7. 55Our Warrants are exercisable for our Class A common stock, and the exercise of such Warrants would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders
8. 56The Warrants are being accounted for as a warrant liability and are recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of the Class A common stock
9. 57If securities or industry analysts cease publishing research or reports about us, our business, or our market, or if they issue negative recommendations regarding our securities, the price and trading volume of our securities could decline