A Business Model Not To Copy

Today, I’m digging into EVgo (EVGO).

EVgo builds and operates DC fast chargers for electric vehicles across the US.

A few things EVgo does well:

• It has leaned into partnerships with automakers and fleets instead of relying only on individual drivers.

• It has improved capital efficiency over time by using partner funding and long-term contracts to offset CapEx.

These were hot and popular business models five years ago, but in my opinion, this is a good example of what to avoid when choosing a business to build or invest your time in:

• Choose a business with a better margin profile. Even after years of growth, EVgo’s gross margins are thin and operating losses remain large.

• Choose a business with opportunities for more competitive differentiation. Most EV charging networks look and function the same, and customers switch based on price, location, and uptime rather than brand loyalty.

A capital-intensive business with very low gross margins and very few opportunities for competitive differentiation is something we should all shy away from!

With that, I'll see you tomorrow!

Nick

The 30,000-Foot View

EVgo builds, owns, and operates DC fast chargers across the US. Drivers pay per charging session, while automakers, fleets, and site hosts increasingly pay EVgo to design, build, operate, and maintain charging infrastructure on their behalf. This creates a hybrid model that blends retail usage with long-term, contract-backed infrastructure revenue.

The company’s strategy has shifted away from being purely a consumer charging network and toward being an infrastructure platform. EVgo’s value proposition is simple: reliable fast charging, placed in high-traffic locations, with the operational complexity handled end-to-end.

Revenue mix (FY-2024):

• Charging network revenue: 60.6%

• eXtend infrastructure and services: 33.7%

• Ancillary revenue: 5.7%

Key Stats:

• Market cap: $414M

• TTM revenue: ~$333.1M

• TTM gross margin: 13.7%

• Employees: 331

• Industry: EV fast-charging infrastructure and services

Company History

• 2010: EVgo founded, focusing early on DC fast charging.

• 2019: Ownership transition and increased focus on infrastructure-style operations.

• 2020: OEM partnerships begin to scale, embedding charging into vehicle purchase programs.

• 2021: EVgo goes public via SPAC, unlocking growth capital.

• 2023: Cost discipline increases and internal reporting and structure issues surface.

• 2024: DOE loan facility structured to support large-scale charger deployment.

• 2025 (YTD): Balance sheet transitions toward project finance while maintaining significant cash reserves.

Show Me the Money

Standout financial features:

• More than 4x from FY-2022 to FY-2024.

• Gross margins have steadily improved as utilization rises. Still very low though.

• CapEx intensity has declined meaningfully as partner funding and capital offsets increase.

• Customer concentration remains high, with a single customer representing a large share of revenue in recent years.

• Dwindling cash balance.

Financial Data

The N.O.O.B. Nine — Competitive Powers

The Nerd Out on Business Nine is made up of Hamliton Helmer's famous "7 Powers" of competitive advantage (Scale Economies, Network Economies, Counter-Positioning, Switching Costs, Branding, Cornered Resource, and Process Power) combined with two of my own (Data Flywheel and Distribution Advantage).

Average Score: 2.4/5 - A business with execution-driven advantages, in theory, rather than a deep structural moat.

Memorable Marketing

EVgo’s marketing is primarily distribution-led rather than brand-led. The company relies on OEM partnerships, site-host relationships, and fleet contracts rather than mass advertising. Reliability and charger availability do more marketing work than creative campaigns.

Key Campaigns and Tactics

• OEM Bundled Charging Programs (2020–2024)

  • Core idea: include charging as part of the vehicle purchase experience.

  • Channels: OEM partnerships, in-car software, dealer delivery.

  • Why it worked: reduced friction and leveraged OEM distribution.

  • Result: charging-related OEM revenue tripled year over year in FY-2024.

• eXtend Infrastructure Services (2021–2024)

  • Core idea: offer turnkey charging infrastructure for partners.

  • Channels: B2B sales, RFPs, enterprise partnerships.

  • Why it worked: solved a real operational pain point for customers.

  • Result: eXtend reached $86.6M in FY-2024 revenue.

• Utilization and Uptime Focus (2023–2024)

  • Core idea: working chargers are the best advertisement.

  • Channels: operations, maintenance, network monitoring.

  • Why it worked: reliability drives repeat usage.

Tactical Takeaways

1. Borrow distribution instead of buying attention.

2. Package operational pain into a sellable service.

3. Treat reliability as a core growth lever.

4. Use contracts to stabilize revenue in capital-heavy models.

5. Measure marketing success in utilization, not impressions.

AI Uses & Opportunities

Current Uses

• Network monitoring and fault detection.

• Utilization forecasting and site-level analytics.

• Payment risk and anomaly detection.

Future Opportunities

• Predictive maintenance to reduce downtime and service costs.

• AI-assisted site selection combining traffic, grid, and permitting data.

• Dynamic pricing to manage energy costs and demand charges.

• Automated permitting and interconnection workflows.

• AI-powered B2B proposal generation and ROI modeling.

Bumps in the Road

• Persistent operating losses and thin margins.

• Heavy CapEx requirements despite improving efficiency.

• Customer concentration risk.

• Internal control and reporting weaknesses.

• Utility interconnection delays and regulatory friction.

• Intensifying competition from other charging networks and automakers.

Your Swipe File

• Choose a business with a better margin profile.

• Choose a business with opportunities for more competitive differentiation.

• Partner funding can be used to optimize capital requirements.

• Be leery of customer concentration.