EVgo, the nation’s largest public fast EV charging network in the U.S. and a wholly-owned subsidiary of LS Power, and Climate Change Crisis Real Impact I Acquisition Corporation announced today a definitive agreement for a business combination that would result in EVgo becoming a publicly listed company.
EVgo meets CRIS’s stringent investment criteria, which focus on investments in disruptive energy infrastructure opportunities that are strongly aligned with environmental, social and governance principles.
Upon closing of the transaction, the combined company will be named EVgo Inc. and publicly listed under the symbol “EVGO”. The transaction will further elevate EVgo’s position as an industry-leading builder, owner and operator of public EV fast charging in the U.S. by funding and accelerating the company’s growth strategy.
Founded in 2010, EVgo is a leader in the transportation electrification space. Through its partnerships with market-leading automakers, fleet and rideshare operators, retail and other site hosts, utilities, governments, and other stakeholders, EVgo has steadily expanded over the last decade to become the largest platform for EV public fast charging in the U.S. As a technology first-mover, EVgo has accelerated the adoption of EVs by providing a reliable and convenient charging experience, close to where drivers live, work and play, for both daily commuters and commercial fleets.
Through its extensive network, powered 100% by renewable electricity, EVgo makes it easier for all U.S. drivers to take advantage of the benefits of driving an electric vehicle and reduce greenhouse gas emissions from the transportation sector.
With more than 800 locations in 67 major metropolitan markets across 34 states, EVgo’s network serves a rapidly expanding customer base that currently exceeds 220,000 customers.
The company has demonstrated significant growth in its utilization and footprint, benefiting from strong partnerships forged with automotive OEMs, site host partners, rideshare providers and other stakeholders in the e-mobility landscape. These include a strategic relationship with General Motors, which selected EVgo for a nationwide EV charging infrastructure buildout, whereby EVgo expects to add more than 2,700 additional fast chargers to its network over the next 5 years. Corporate partners also include Uber and Lyft, which selected EVgo as one of their first charging providers. EVgo has also worked with Tesla, to enable native fast charging on EVgo’s network. Additionally, EVgo partners with governments and utilities across the U.S., enhancing the nation’s infrastructure and supporting job creation.
EVgo’s ongoing ownership of its charging network enables the company to deliver superior customer service, as evidenced by its industry-leading uptime of approximately 98%. Beyond market-leading fast charging capability and reliability, EVgo also has developed a dedicated suite of software-enabled products and services, such as charging reservation capability, smart access to host sites, integrated retail promotions, and loyalty programs. This value-added approach allows EVgo to create a differentiated and holistic offering for its customers while providing the company with additional capital-light revenue streams.
Market Overview – Supportive Fundamentals Driving EV Growth and Adoption
EVgo’s business model is underpinned by over $300 billion in industry-wide automaker and battery manufacturer commitments to electric vehicle programs, trends towards mobility as a service, and industry expectations for the EV market to increase over 100x between 2019 and 2040. Market growth is expected to be driven by both commercial and consumer market segments. Fleet electrification is accelerating due to a lower total cost of EV ownership, regulatory imperatives, and increased focus on ESG alignment. Similarly, consumer adoption is increasing rapidly, supported by the proliferation of affordable electric vehicles, greater choice in EV models, such as SUVs and crossover utility vehicles, and increased awareness of the need to combat climate change through electrifying the transportation sector.
As EV adoption increases, fast charging demand is expected to outpace the already unprecedented growth in EVs in operation, as a result of the proliferation of larger, heavier vehicles, the electrification of fleet and commercial applications, and the changing demographics of EV owners. Fast charging’s share of EV charging is expected to increase to greater than 40% by 2040. However, even at that point, EVs are expected to account for less than a third of all vehicles on U.S. roads, providing a significant pathway for further, multi-decade growth.
Management & Owner Commentary
“Just a few years ago, electric vehicles were considered niche,” remarked Cathy Zoi, Chief Executive Officer of EVgo. “Today, improved technology, lower costs, greater selection, and a better appreciation for the performance of EVs is increasingly making them the vehicle technology of choice. With that, the need for fast charging is on the rise. An estimated 30% of Americans do not have access to at-home charging, and EVs will be increasingly deployed by fleets to transport goods and people in an environmentally-friendly way. Time is precious for all of us, so a public fast charging option with an expanding footprint like EVgo is essential to meet the rapidly growing needs of EV drivers of all types.”
“EVgo is a crown jewel in our portfolio, and is one of the LS Power businesses leading the charge toward decarbonization,” commented David Nanus, LS Power’s Co-Head of Private Equity and EVgo Chairman. “EVgo’s extensive nationwide network and deep relationships with its customers and other stakeholders create a real competitive advantage for the company, and this business combination, which will both fully fund and accelerate the company’s growth plans, positions EVgo to further strengthen its market-leading position.”
“Starting from our IPO in September, we set out looking for a purpose-driven company making a meaningful contribution in the fight against climate change that was best in class in its sector. We are excited to have found that company in EVgo,” said David Crane, Chief Executive Officer of CRIS. “We spent a substantial amount of time conducting extensive due diligence on EVgo, affirming our belief of its enduring first-mover advantage. It has a distinct and highly advantageous owner-operator business model, supported by strategic partnerships with key industry players singularly focused on an essential and growing factor necessary for supporting widespread EV adoption. EVgo’s comprehensive national DC fast charging network capable of charging every type of electric vehicle is unparalleled, and we are proud to be a part of its ongoing success.”
The pro forma implied market capitalization of the combined company is $2.6 billion at the $10 per share PIPE subscription price, assuming no CRIS shareholders exercise their redemption rights. Net cash proceeds are estimated to be approximately $575 million, comprised of $400 million from the PIPE and approximately $230 million of cash held in trust by CRIS before any adjustments due to redemptions by CRIS shareholders and payment of deferred underwriting compensation, less transaction expenses.
Proceeds will be used to fuel EVgo’s growth strategy, including the buildout of its charging infrastructure network, and will enhance the company’s position as the market leader in the transition to clean mobility. LS Power and EVgo management, who together own 100% of EVgo today, will be rolling 100% of their equity into the new company, and is estimated to represent approximately 74% of the company upon transaction close.
EVgo’s leadership will remain intact, with Cathy Zoi continuing as Chief Executive Officer of the combined company, overseeing its strategic growth initiatives and expansion. Cathy will work alongside other existing executive team members, including Olga Shevorenkova, Chief Financial Officer, Ivo Steklac, Chief Operating and Chief Technology Officer, and Jonathan Levy, Chief Commercial Officer.
The Board of Directors of the combined company will include representation from EVgo, LS Power and CRIS, as well as independent directors. David Nanus of LS Power will serve as Chairman and will be joined by Cathy Zoi of EVgo and Beth Comstock, Chief Commercial Officer of CRIS; other Board appointments will be made prior to closing.
The transaction has been approved by the EVgo board of directors and the CRIS board of directors. Completion of the proposed transaction is subject to customary closing conditions, including the approval of the stockholders of CRIS, and is expected to occur in the second quarter of 2021.