Can The EV Charging Business Survive the Trump Administration? 

Hunterbrook Media’s investment affiliate, Hunterbrook Capital, did not take any positions related to this article. 

Yesterday, the Federal Highway Administration abruptly suspended approval of all state Electric Vehicle Infrastructure Deployment Plans, effectively freezing the $5 billion National Electric Vehicle Infrastructure Formula Program that many charging-station operators have been counting on to help fund large portions of their expansion. 

The move follows President Donald Trump’s sweeping executive order to scrutinize and, in some cases, roll back billions of dollars in clean-energy incentives, adding to the uncertainty surrounding the fledgling EV charging-stall industry.

In the aftermath of Trump’s executive order to reverse what he calls the “electric vehicle mandate,” shares in charging stall companies ChargePoint and Blink Charging skidded. Even Elon Musk’s Tesla, which has 12,580 direct current fast-charging ports across more than 1,200 U.S. locations, the most of any charging company, is down.

For EVgo (NASDAQ: $EVGO), one of America’s largest operators of fast-charging stations, the moves are a direct blow to the loss-making company’s optimistic financial projections and ambitious growth plans —a rosy outlook that was based in large part on a $1.25 billion loan from the U.S. Department of Energy (DOE) that may also now be in jeopardy. 

The Trump Administration’s Attack on EVs

On January 20, his first day in office, Trump’s order directed his administration to review an Environmental Protection Agency rule requiring automakers to cut their greenhouse gas emissions starting with 2027 car models. The rule aims to boost the EV charging industry by making half of all new vehicles sold by 2030 electric. As of the third quarter of 2024, just 1.4% of all U.S. vehicles on the road are electric, Experian Automotive data shows. 

Trump’s “Unleashing American Energy” order also calls for “considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable.”

Though not explicit, the target of the administration’s ire appears to be the Biden administration’s $7,500 consumer tax credit for buyers of new EVs ($4,000 for used vehicles) and for lessors of EVs, an incentive that a Reuters exclusive last November said Trump intends to kill off. The average cost of an EV (over $55,500) is about $6,000 more than its combustion engine counterpart. The tax credit is crucial to luring buyers. A similar fate is likely in store for a $40,000 credit for businesses and nonprofits that buy EV fleets, law firm Buchanan Ingersoll & Rooney wrote last December. 

Trump would need Congressional approval to kill the credits — support he seems likely to get from the Republican-controlled body as it considers extending provisions of the 2017 Tax Cuts & Jobs Act that are due to expire this year. “You have to think that’s coming,” said analyst Chris Pierce at Needham & Co. “There’s gonna be less EVs on the road—that’s less EVs that they can charge. That would be bad news, for sure.” 

EVgo appeared to acknowledge the “uncertainty” in a December 12, 2024, presentation, noting the company’s “lack of visibility” into consumer demand for direct current fast-charging. 

Trump’s executive order also included language on “unfair subsidies,” which appears to refer to the 30C tax credit — expanded to $100,000 per charging port in 2021 — for commercial installers of EV chargers in low-income and non-urban communities.

Additionally, the order purported to pause disbursements from the NEVI — a pledge that manifested yesterday with the Federal Highway Administration’s letter announcing that states were no longer authorized to spend monies previously awarded under the program. 

Los Angeles-based EVgo, along with its partners, had secured “approximately 20% of awarded NEVI funds” as of October 2023. The company is currently building more than two dozen charging stations across Ohio, Illinois, Pennsylvania, Michigan, and Indiana with $159 million in NEVI grants, according to a Hunterbrook analysis of data from an organization called Plug in America. 

The Big Question Mark

The executive order adds further pressure to an EV market that’s already growing at a slower pace in the near term as automakers dial back production in favor of cheaper, faster-selling hybrid vehicles. (Most plug-in electric hybrid vehicles can’t use EV charging stalls, the U.S. Department of Transportation says.) But the big uncertainty for EVgo revolves around the company’s larger-than-expected $1.25 billion loan guarantee from the LPO. The financing, finalized in December 2024, was widely seen as a catalyst for the company to nearly triple its network expansion by 2030 and chart a path to profitability. EVgo initially said the loan would help finance the construction of roughly 7,500 new fast charging stalls, bringing its total to 11,000 units, but later dialed back the total to “at least 10,000.”

The company, which called the loan “transformational to EVgo’s value,” tapped its first, $75 million tranche of the funding on January 8. 

The low-cost funding, secured just 10 weeks after EVgo received a conditional commitment for $1.05 billion in financing, was a testament to the Biden administration’s commitment to expanding EV infrastructure. And it saved cash-crunched EVgo from issuing new shares that would dilute existing shareholders — something Khan has vowed repeatedly not to do, most recently in a quarterly earnings call on November 12, 2024. The company had cash of just over $153 million on September 30, 2024, down roughly a quarter from a notch over $209 million on December 21, 2023, and $257 million on June 30, 2023. LPO loans cover only 80% of a financed project’s costs, which means EVgo must come up with $250 million in cash or other financing to make use of the full amount. 

Trump’s order calls for a 90-day pause on disbursing funds from the Inflation Reduction Act of 2022 (IRA), former President Joe Biden’s climate legislation that unlocked nearly $400 billion in federal funding for clean energy. 

EVgo’s LPO loan comes out of the IRA’s expansion of the Title 17 funds for green energy. In December 2024, Teri L. Donaldson, the DOE’s Inspector General under the Biden administration, cited in an interim report the risk of “fraud, waste, and abuse” in the LPO program and said that the agency should halt all pending loans. Trump had previously vowed to “rescind all unspent funds” in the IRA. 

Mary Anne Sullivan, an energy lawyer at Hogan Lovells, said that because EVgo’s loan contract is legal, valid, binding and enforceable, “I don’t think payments under such a provision can be paused by an Executive Order.”

But Peter Davidson, a former head of DOE’s Loans Program Office — the agency that approved Evgo’s loan — told Latitude Media: “The problem is that every loan, once it’s been approved by LPO and the Secretary of Energy, has to go through a system of approvals in Treasury and also Management and Budget.” He added: “To the extent there are actors in those positions who don’t want to authorize the loans, they just will not be authorized no matter what the legislation says.”

Mark Riedy, who leads the energy practice at Kilpatrick, Townsend & Stockton, noted that the Office of Management and Budget said one day after Trump’s executive order that agency heads “may disburse funds as they deem necessary after consulting with the Office of Management and Budget.” That, Riedy said, shows “flexibility.” Still, he said that Trump could try to walk back closed loans and prompt recipients to sue the federal government: “He’ll say, ‘Bring it on.’ He loves lawsuits.” 

“Wild West” Meets Trump’s Guns

With just over 1,700 fast-charging ports, EVgo competes in what Harvard Business School researchers called a “‘Wild West’” of pricing, with startups seeking to scale rapidly amid losses, broken and vandalized chargers, and a lack of industry-wide technical standards. Electrify America — a subsidiary of Volkswagen Group with more than 4,000 fast chargers — EVgo, and Tesla “have 80 percent of the market for public DCFC charging,” McKinsey wrote in an October 5, 2024, report.

EVgo reported a $33.3 million net loss in Q3 2024 despite record revenues of $67.5 million. A deferred tax asset on EVgo’s balance sheet, totaling $167.1 million, remains fully reserved due to the company’s persistent losses, signaling executives’ limited confidence in near-term profitability. The accounting item shows that EVgo “has very little, if any, confidence in its ability to generate taxable income. Accordingly, here, while the DTAs are nice to have, it seems unlikely that they will be realized, at least not in the foreseeable future,” independent tax and accounting expert Robert Willens told Hunterbrook.

Federal Incentives — The Key to Profitability

EVgo has offset roughly half the cost of its capital-intensive charging stalls through NEVI grants, infrastructure payments through partnerships with GM and Pilot to put EV charging stations at Pilot and Flying J locations across the country,  and 30C tax credits, EVgo CEO Badar Khan said during a call with investors on December 12, 2024. 

Khan told the call that stalls built under the loan wouldn’t rely on NEVI grants for profitability.

But he added that EVgo planned to continue to rely on 30C credits, saying “it’s more cash flow for the company.” With those credits potentially on the chopping block, EVgo’s future profitability is further pressured.

McKinsey estimates that a typical charging station with four 150-kilowatt-hour  chargers operating at a 15% utilization rate would lose $40,000 to $50,000 annually without government incentives. With NEVI and 30C credits, those same stations could achieve a modest EBIT profit of $25,000 to $30,000. 

Khan projected in his most recent earnings call that the company would break even this year on earnings before interest, tax, depreciation, and amortization (EBITDA), a key measure of profitability. With the LPO loan in hand, he told the December 12 call that the company would see adjusted EBITDA, which excludes one-off or unusual items, of $300 million to $425 million once it builds the 7,500 stalls under the LPO loan. 

To some analysts, that’s magical thinking. “To get to the $300 million that they say they can get to, that’s where you need to believe a lot more,” Pierce told Hunterbrook in an interview before Trump’s order. 

EVgo spokesperson Terry Preston said the company had no one available for an interview.

Charging Stall Math

The economics of the EV charging business hinge on four key factors: the location of charging stations, their cost per kilowatt-hour of energy, how frequently charging ports are used, costs for maintenance and replacement of older, slower chargers, plus, for EVgo, trends in ridesharing. 

Getting customers to charge more frequently at a given stall within a sizable network is a key component of profitability: Boosting throughput means more revenue coming out of a fixed asset. Over three months through September, 2024, EVgo more than doubled total stall throughput to 78 gigawatts per hour compared to the year earlier.

In the fourth quarter of 2023, the 15% highest-performing stalls in EVgo’s network averaged an annual cash flow of $31,615 each, slides from a financial modeling webinar last April by the company show. The average for all of its stalls that period: $1,642. The numbers have improved since then — in the third  quarter of 2024, the top 15% averaged $54,042 in gross profit, and the network average was $16,700. On the December 12 call, Khan said that EVgo expected gross profit per stall to average a higher-than-expected $49,500 “at the mid point of our range.” That translates to “revenue of roughly $1 billion in revenue,” he said, adding that the company’s gross profit on charging would reach “approximately $495 million to $594 million.”

Regarding Khan’s prediction that all of the new stalls will have the same economics as the top 15% of performers, “that’s where I’m most skeptical,” Pierce told Hunterbrook before Trump’s executive order. Removing 30C credits from the equation means more pressure on charging stall profitability.

Another concern: energy costs. In its April 2024 webinar, EVgo said that its 15% top-performing stalls had average revenue per kWh of $0.57. In a December 12 presentation, it predicted $0.55–$0.57 once all the stalls are built. But that’s “pretty high to assume for a U.S. nationwide number,” Castelli observed, noting that California, which accounts for roughly half of EVgo’s throughput, has utility rates that “are at least double, if not close to triple, the U.S. average.” As EVgo uses the LPO loan to expand to other states with lower rates, the “average revenue per kilowatt hour is going to look vastly different.”

Added Pierce: “I don’t know that these stalls they’re putting in with this billion dollar loan can match the top 15% soon.”

A “Cash Drain” in the Making? 

Adding to the financial strain is EVgo’s tax receivable agreement with majority shareholder LS Power, which requires EVgo to remit 85% of its net realized tax benefits to the private equity firm. As EVgo scales its operations, this agreement could siphon millions in cash annually, further complicating its path to profitability. Willens called the TRA “a cash drain.” 

In December, LS Power reduced its stake to roughly 60% from 67% by swapping 23 million nonpublic shares for publicly traded Class A shares and announcing it would sell them, after which EVgo’s shares plunged about 26%. LS Power sold the shares for $5, about 20% below their prior closing price on the day the swap was announced. While it’s not unusual for a private equity firm to cash out some of its holdings five or so years in (LS Power bought EVgo in 2019), the move spooked investors.

“Why would they do it at $5, if they were so confident in EVgo’s growth prospects from here?” asked Pierce. “If you’re bullish, it’s hard to come up with a reason why. If you’re bearish, it’s not hard to come up with a reason why.”

And plenty of investors are bearish: Short interest was at nearly 33% as of February 7 — even short interest above 10% could be a warning sign. EVgo shares are down nearly 23% so far this year. After hitting a 52-week high of $9.07 last October when the company got its conditional LPO, they closed at $3.34 on February 6, and declined sharply after the NEVI news. 

Amid the chaos, insiders have also been cashing in — another potential red flag. Over 12 months through January 3, EVgo officers and directors, including CEO Khan, sold more than twice as many shares (46.4 million) as they bought (23.1 million), with most of the sales preplanned under 10b5-1 securities rules governing insider sales, Nasdaq data shows.

Said Castelli: “There’s a high degree of uncertainty in terms of how this business plays out.”