$clii EvGO

Let's talk about some assumptions. Please fire back if you see anything you disagree with. I want to test my thinking.

First, credit to EvGO for sharing more granularity than peers $blnk $chpt $snpr
Stock is at $14/sh
263mm basic shares out
$3.7bn market cap

$575mm cash

We'll set aside warrant dilution for the time being to keep things simple
The Co. expects $20mm revenue in 2021 and $(58)mm of EBITDA

The value is based entirely on cash flows from a business that really doesn't exist yet
In five years, by 2026, EvGO expects 5mm EVs to be on the road in the U.S.

This is consistent with estimates from banks like Jefferies and MS

I doubt the lithium industry $alb $lthm $lac $sqm can supply the material to enable >30mm BEVs built globally by then, but okay
Let's set the TAM for charging cos

@ITS_UCDavis research shows EVs drive up to 15k VMT/yr (vs >11k/yr VMT for the ave car)

5mm EVs at 15k/yr is 75 bn VMT/yr in 2026
75bn VMT/yr on mileage of 3.0 kWH/mi works out to 25.0 TWh of charging demand by EVs in 2026

EvGO assumes 25.0 TWh as well
Research from different sources confirms over and over that >80% of charging takes place at home

In my view, nothing will change that until fleets like $lyft $uber go entirely electric and perhaps even achieve FSD, forcing them to charge away from homes
and until EVs penetrate the 35% of U.S. households that do not own, i.e. face barriers to installing home chargers
I assume 15% of charging takes place in public

15% of 25.0 TWh TAM = 3.8 TWh available for the charging pubcos to capture
EvGO assumes they will sell 1.7 TWh in 2026

This implies they will capture 45% of all public demand five years from now

All their balance sheet and OCF will be consumed by building locations by then, so the $3.7bn mkt cap is an approximation for their enterprise value
So, 45% of the 2026 market is worth $3.7bn

What's the other 55% worth? EvGO's mkt cap implies it's worth $4.5bn

Well, the combined mkt caps of $blnk $chpt $snpr is $13.1bn
EvGO has 1,440 DCFC ports and 818 locations now, implying 1.8 ports/location

By 2026 they expect to have 12,613 DCFC ports. At 2 ports/location that implies 6,300 locations

The $3.7bn market cap implies a value of nearly $600k/location
For perspective, the replacement cost of a DCFC location with two ports is $140k ($70k/port on EvGO's numbers), so the stock is trading at 4.3x 2026 replacement cost

The average retail fueling location is probably worth $1-2mm. Many of them own land and have C-store profits
EvGO is supposedly going to capture 45% of the available public charging demand with just 12,613 ports or ~6,300 locations, even though the industry already has >80k locations and will have several hundred thousand locations, many of which will be DCFC too
Does EvGO have a secret sauce for site selection??
EvGO assumes $0.30/kWh gross profit by 2026, down only slightly from $0.42/kWh in 2021

Fwiw, $blnk says they're getting GP of $0.27/kWh right now
I don't have a view on how much unit margins will compress. Not sure if lower prices influence behavior. Hard to price shop. If you get caught out, you charge where you can based on location rather than price

I'll go with the $0.30/kWh
The 1.7 TWh they capture in 2026 is worth $522mm of gross profit (up from $7mm in 2020)

Take out their forecasted $191mm of opex and you get $331mm of EBITDA

So it's already at 9x 2026 EBITDA which assumes a 65x revenue increase ($14mm 2020 to $905mm 2026)
The entire public charging TAM of 3.8 TWh would generate $1.1bn of gross profit at $0.30/kWh

EvGO assumes opex is 36% of gross profit

Applied to the industry broadly, the $1.1bn of gross profit would become $700mm of EBITDA

The pubco's combined market caps is $16.8bn
What if margins compress due to competition?

What if home charging becomes so fast that you are always assured of getting fully charged overnight, and the 15% goes to 10%?

What if the EV adoption S curve is delayed because of constraints like lithium availability?
What if growing ICE reliability causes the legacy fleet to turn over even more slowly, and delays EV adoption?

What if charging pubcos continue their failure to standardize POS payment methods and make charging stations fungible like gas stations?
What if raw materials shortages drive up capital costs in the short-term?

What if interest rates rise?

There is no room for error, and this is a business model that has failed to show any evidence that it is viable
I'll add one more: what if WFH persists to some degree and VMT for EVs doesn't achieve 15k/y?

The UC Davis data of 14,996 VMT was from 2019


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