EVgo Inc. Q1 FY2022 Earnings Call

Greetings and welcome to the EVgo Earnings Call for the first quarter of 2022. This conference is being recorded. I will now hand it over to your host, Ted Brooks, from Investor Relations. Thank you, and you may begin.

Hi, everyone. Welcome to EVgo's First Quarter 2022 Earnings Call. My name is Ted Brooks, and I head up Investor Relations at the company. Today's call is being webcast and can be accessed from the Investors section of our website at investors.evgo.com. The call will be archived and available there, and the company's results, investor presentation and a transcript of today's proceedings will be available at the Events and Presentations section of the Investors page after the conclusion of today's call. Joining me on today's call are Cathy Zoi, EVgo's CEO; and Olga Shevorenkova, the company's Chief Financial Officer. Today, we will be discussing EVgo's latest financial results for the first quarter of 2022, followed by a Q&A session. During the call, management will be making forward-looking statements regarding the 2022 fiscal year and our outlook for expected growth and investment initiatives. These forward-looking statements involve risks and uncertainties, many of which are beyond our control, and could cause actual results to differ materially from our expectations including, among other risks and uncertainties, the severity and duration of the effects of the COVID-19 pandemic. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. For a more detailed description of factors that could cause actual results to differ, please refer to our Form 10-Q filed soon with the SEC and posted to the Investors section of our website. Also, please note that certain financial measures we use on this call are on a non-GAAP basis. For historical periods, we provide the reconciliations of these non-GAAP financial measures to GAAP financial measures. The investor presentation can be found on the Investors section of our website. With that, I'll turn the call over to Cathy Zoi, EVgo's CEO. Cathy?

Thanks, Ted, and good morning, everyone. EVgo had a strong first quarter, advancing our position as the nation's most expansive public fast charging network for electric vehicles. Our results, including the recent partnerships we've signed, demonstrate the advantages of being a pure-play EV charging company with a robust and rapidly growing DC fast charging network. Our ability to drive technological innovation and deliver new products and solutions for both consumers and partners alike will continue to provide us with a competitive advantage in an exponentially growing EV charging market. The first quarter of 2022 shows that we are on the right path to achieving this growth. EVgo realized revenue of $7.7 million, an 86% increase compared to the first quarter of 2021, with throughput growing by 95% to 8.0 gigawatt hours relative to the same quarter last year. We ended the quarter with 375,000 customer accounts, which represents a 51% increase over the first quarter of 2021. Q1 of 2022 was EVgo's best quarter ever for operational and mobilized charging stalls, representing a 166% increase in newly mobilized and newly operational stalls when compared with the first quarter of 2021. Newly operational stalls in the month of March alone exceeded every previous full quarter except for 1. Total stalls in operation or under construction reached approximately 2,100 at the end of the first quarter, putting EVgo on track to achieve our full year target. We achieved this impressive performance despite continued headwinds from supply chain issues and inflationary cost pressures. We increased our active engineering and construction development pipeline, an important progress stage for our business, to more than 3,300 stalls, which marks a considerable jump from the 1,500 stalls at the end of the first quarter of 2021. This growth in the funnel has been substantial, largely due to the experience of our team and EVgo's reputation as a dependable partner. As EVgo has been scaling operations to capture the demand growth for fast charging, we have focused both on increasing the size of our development pipeline and the capacity of the sites themselves, both in terms of stalls per location and power level of the chargers. OEMs have started to produce EVs with bigger batteries with more powerful charging capacities, and they intend to sell lots of them. In anticipation of this market evolution, EVgo's standard station configuration will be built with 350-kilowatt charging and at least 6 stalls, and more if the site host and utility grid can accommodate it. This is an exciting development for the overall EV industry. Turning to business development and new partnerships. In the last several weeks, we have signed and announced partnerships with Toyota and Subaru, growing our list of OEM partners. Together, our OEM partners are responsible for more than 40% of vehicle sales in the U.S. Those partnerships are moving into the implementation stage with software and marketing integrations underway as Subaru has announced pricing for the Solterra and begun making orders available to reservation holders. Both Toyota and Subaru anticipate delivering new EV models in Q2 and Q3 of this year. EVgo also entered into a partnership with Chase Bank to add DC fast charging stations at many of its retail banking locations across the U.S. And we already broke ground at the first Chase site that will host EVgo fast chargers in Indiana, continuing to make charging more convenient and accessible for drivers. On the site host front, we also went live with our first 5 EVgo fast charging sites at Meijer grocery stores in Michigan and Ohio, expanding our presence in the Midwest as EVs increase in popularity across the country. EVgo also opened new sites with existing retail partners like Wawa, Whole Foods, and Albertson Safeway, and with Brixmor and Regency shopping centers in markets from Worcester, Massachusetts, to Tacoma, Washington. EVgo also launched the implementation of a data sharing and roaming agreement with Shell Recharge Solutions, which provides drivers with accounts on either charging platform access to the other's network. Agreements like these enhance the interconnectedness of the charging ecosystem and put drivers first, making it easier for them to find a fast, reliable charge. This latest agreement allows EVgo drivers access to approximately 50,000 charging stations across the U.S. and brings drivers using the Shell Recharge Solutions charging app to the EVgo network, further increasing our throughput. Demonstrating the broadening geographic diversity and wide reach of EVs, EVgo also announced a partnership with the City of Portland, Maine, building on our long history of serving as a partner of first resort to deliver innovative charging solutions to forward-leaning municipalities. This new partnership will bring EVgo fast chargers and Level 2 chargers to city-controlled properties and provide a direct commercial relationship with the City of Portland's municipal fleet vehicles, helping to accelerate their ability to reach their sustainability goals. Reach beyond municipalities continues to take advantage of the benefits EVs can offer. And this week, the EVgo team is exhibiting at the ACT Expo in Long Beach, California. It's kind of like the Woodstock for clean transportation, where we are highlighting EVgo Optima and our other customized charging solutions for fleets of all stripes. This past quarter, EVgo and Uber launched a new joint marketing program, including direct in-app messages to drivers on the Uber platform, informing them of the special pricing available to them on the EVgo network. Those efforts are yielding real results as monthly EVgo throughput from drivers on the Uber platform increased by almost 50% in April from the average first quarter usage this year. Also during the quarter, we continued successfully securing funding awards from governmental agencies and utility partners we worked with across the U.S., including the California Energy Commission and New Jersey's Public Service Electric and Gas as well as many others. EVgo continues to deliver software-driven ancillary services like EVgo Advantage and EVgo Reservations, which has demonstrated solid success and provided us with a competitive differentiation in the charging market. We have observed a steady increase in customer demand for reservations and have doubled the number of EVgo locations where reservations are available. We are now offering reservations at nearly 50 sites across 7 different states in the U.S. and plan to roll out the offering more broadly. We currently charge $3 per reservation with a $2 no-show fee. Such services have the potential to be highly accretive to our financial profile as these fees fall directly to the bottom line and enhance our margin profile. As EV penetration grows, we expect to offer a wide array of ancillary software-driven services that, like Reservations and EVgo Advantage, set EVgo apart and allow us to efficiently monetize driver interactions. Also in the software vein, in the last quarter, we launched EVgo Inside, a suite of application programming interfaces that enable third parties to embed the full EVgo charging experience into their own applications. This capability allows third parties like auto OEMs to provide holistic experiences for their new EV owners that include the complete EVgo charging experience. As an example, we are currently working with Toyota as they leverage EVgo Inside and build their integrated driver application within the Toyota app. As you can see, this quarter, we have been executing on each and every element of the business that makes EVgo stand apart. Infrastructure buildout in locations where drivers want to charge, partnership development with marquee names in the transportation space and addition of value-creating software services that delight our customers and partners alike. We are excited to build on this momentum in the quarters to come. And with that, I'll turn it over to Olga to discuss our financial results. Olga?

Thanks, Cathy. I will start by reviewing the key operational highlights. As mentioned, we had 2,110 stalls either in operation or under construction at the end of the first quarter, with 1,772 stalls operational and 338 under construction. This marks a 23% increase from the first quarter of 2021. Our engineering and construction development pipeline more than doubled year-over-year to 3,344. In the first quarter, we launched stalls in 12 different states, including activity in Michigan, Ohio, and North Carolina, in addition to California. We are very focused on speeding up the selection, development, construction, and commissioning of sites while ensuring we maintain our profitability and return targets. EVgo continues to collaborate with various stakeholders in the charging ecosystem such as utilities, government agencies, site hosts, and equipment suppliers to enhance charger development. Our progress is evident from the strong performance in March, which has helped us shorten development timelines. Concurrently, we've introduced several internal process improvements that are already resulting in cost and time savings. A key improvement has been the use of drones to automate parts of the site survey process, enabling us to gather information more accurately and at a lower cost. Consequently, our overall survey activity rose nearly 25% compared to the fourth quarter of 2021. Network throughput reached 8.0 gigawatt hours for the quarter, with March achieving the highest throughput month in EVgo's history. It's worth noting that vehicle miles traveled for both internal combustion and electric vehicles exhibit seasonal patterns, with spring and summer typically seeing the highest activity. While we observed a similar trend in this year’s first quarter, along with some impact from the omicron spike and variability in fleet throughput, network throughput was still 95% higher than in the first quarter of 2021, reflecting the ongoing shift of consumers toward EVs amid the COVID recovery. Now, turning to financial results, we reported $7.7 million in revenue for the first quarter of 2022, representing an 86% increase compared to the same period in 2021. Charging revenue was up 66%, ancillary revenue increased by 265%, and regulatory credit sales rose by 142%. Retail growth was the primary contributor to the 94% increase in charging revenue. The addition of PlugShare in July 2021 has also positively impacted ancillary revenue. It’s important to highlight the significant increase in regulatory credit sales this quarter. Many are aware that the pricing of Low Carbon Fuel Standard credits has decreased in the past year. Historically, there has been a two-quarter lag between generating and monetizing these credits. However, starting this quarter, our new trading partnership allows us to reduce this lag to just one month. This means that for the first and second quarters of 2022, we will be able to bring forward five months' worth of credit monetization, leading to elevated regulatory credit sales for Q1 and Q2. After that, we anticipate this will normalize. Adjusted gross margin for the first quarter was 37%, bolstered by the accelerated sales of regulatory credits. Without this benefit, we estimate our adjusted gross margin would have been 29%, which is an approximate 10 percentage point increase from the first quarter of 2021. CapEx has significantly increased year-over-year due to the accelerated pace of charger deployment, while G&A expenses have aligned with our expectations. We reported adjusted EBITDA of negative $18.2 million, which also met expectations. We started the year on track for our anticipated ramp-up and expect to meet our financial and operational guidance for the full year 2022. We look forward to seeing many of you in the coming weeks. This concludes our prepared remarks, and now I will turn the call back to the operator to open the line for questions. Thank you.

Our first question comes from Maheep Mandloi with Crédit Suisse.

Just on the guidance itself, could you just talk about the drivers over here? I think on the last call, we talked about recovery and rideshare kind of providing some upside here. So just given the rideshare companies themselves expecting a faster growth year, do you see some growth on that end? And then I have some follow-ups.

Cathy here. We do expect overall operations to ramp back up throughout the year. We anticipate continued recovery in rideshare and an increase in EV sales and penetration. Our business model is linked to the number of EVs on the road, so with the ongoing recovery from COVID, we expect to maintain our momentum. Olga, do you have anything to add?

Right. Especially I would like to emphasize that our throughput is especially sensitive to the number of EVs of our OEM partners driving on the road, such as GM, Nissan, Toyota, and a few others. So we get a higher share of those drivers, and again, especially sensitive to those, and we're monitoring how the sales are unfolding.

Got it. And just like on the high level from a federal incentives point of view or state incentives, could you just remind us where we are or what's the status of the infrastructure bill and expectations on kind of like some of that money kind of flowing through the different states here?

Yes, you bet. So again, the $5 billion infrastructure bill money is not likely to start to flow until the end of this calendar year at the earliest. So where we are in the process, Maheep, is that the states are now preparing their plans, their individual plans for implementation based on the guidance that the federal government produced, I think it was in March, and those plans from the states are due August 1. And then the federal government has to review those plans and has undertaken to provide a yes/no, this works with what we want by the end of September, I think it is. So that's all sort of happening right now. In addition, the Department of Transportation is meant to issue technical guidelines on the program. Again, they were supposed to come out on this Friday. We hear through kind of the runways in Washington that may be delayed just a little bit. But those are technically specific guidelines. What our team at EVgo has been doing is we've been liaising with state DOTs as they think about their own individual state plans. And the feedback that we're getting is some of EVgo's own best practice documents, our Connect the Watts program has been very, very helpful, particularly to those states that have not had much experience to date in deploying fast chargers. So we're actively engaged. We're really excited about this. But again, it's not necessarily going to be material financial close until the end of the calendar year at the earliest.

Got you. No, thanks for that clarity. And just one last…

I want to make one more point regarding federal matters, specifically the $5 billion infrastructure funding known as NEVI. There’s also another aspect formerly related to Build Back Better, which includes a package of incentives that was delayed at the end of last year due to Senator Manchin's actions. Recently, it seems there might be a possibility of reaching an agreement on tax incentives with Senator Manchin's support, encompassing both 30C and 30D. The 30C tax provision applies to building EV infrastructure, while 30D pertains to individual EV purchases. Our team in D.C. is receiving indications that a deal could potentially be finalized with terms agreed upon by Memorial Day. Although it won't become law immediately, there is a newfound cautious optimism within policy circles about its possibility. This development could benefit EVgo, and while we haven't modeled its impact, it is likely to be advantageous for us.

That's interesting. Memorial Day is probably the timeline for that, right? At least in terms of negotiation, if not the final…

Yes. Yes. In terms of the negotiation, yes, yes.

Right. And I guess just one last one on housekeeping. On that $7.7 million number, Olga, if you could just remind us the regulatory credit, is that part of that $7.7 million, or is that in addition to that $7.7 million? And how should we kind of think about seasonality on an annual basis here?

We reported GAAP revenue of $7.7 million for this quarter, which includes approximately $1.4 million from regulatory credit sales. We do not provide specific guidance on the expected amount of regulatory credit sales for the year, but it is factored into our overall guidance, which remains unchanged. Currently, we are seeing a slight decrease in credit prices. Although they have increased recently, this does not affect our methodology for recognizing credits, as I explained earlier. Overall, we anticipate a similar total for the year compared to what we projected a few months ago.

Our next question comes from Ryan Greenwald with Bank of America.

Appreciate the time. Maybe just starting with throughput for the quarter. Can you unpack that a bit more? It looks like a 2% sequential drop, despite AFDC data suggesting 10%-plus increase in stalls. How much do you guys attribute this to seasonality? Any noticeable pressure from competition? I know you guys alluded a bit to other factors as well, but if we could just kind of quantify that a bit more?

Olga, you and I have been discussing the details of this. Would you like to address that?

Sure. It's important to note that the number of stalls isn't the only factor influencing throughput for anyone, including us. The primary factors that determine pricing are the volume of cars and the amount of driving they do. This likely explains the growth in the number of stalls, even on our network, while overall throughput appears flat or slightly decreased. This fluctuation can be attributed to seasonality, as January and February are typically the lowest months for vehicle miles traveled in the United States, with an increase during the summer. Additionally, the surge of the omicron variant impacted both December and January. Data from sources like OpenTable showed a noticeable decline in restaurant bookings during those months, which reflects the demographics of our network users. In a typical year, January would be slower compared to other months, but the omicron surge exacerbated the decline due to increased illness affecting driving patterns. We presented a graph that displays the performance in January and February—February has fewer days compared to January, but adjusting for that shows a recovery by the end of February. In March, we observed significant recovery linked to a slight easing of COVID-related restrictions, as people returned to the roads and seasonal driving began to pick up. Another factor affecting this situation is fleet volatility. We have take-or-pay contracts with our autonomous vehicle partners, where their payments are not contingent on usage, but they are still testing and their usage patterns fluctuate. They adjust their operational levels based on their research and development cycles, which resulted in a slight decrease in activity in January and February, but that is now improving. While this does not impact our revenue, it does have an effect on throughput along with the influence of omicron and seasonality in the retail sector.

Got it. That's helpful. Any color you guys can provide around same-stall economics and utilization versus comparable periods?

Sorry. Say that again, Ryan.

In terms of just the same stalls on an apples-to-apples basis without the additional capacity here, can you help kind of frame utilization and profit per stall versus comparable period, even just kind of Q1 2021?

Olga.

Yes. So maybe just to take a step back, when you add a stall to the network, it doesn't necessarily mean that, that stall by itself comes with some additional utilization. You're kind of looking at the overall market. And our research and data analysis indicates that people kind of risk spread themselves, if you wish. And the growth really happens when people start driving more or when you add new cars to the market. So looking at it as a same-stall basis, it is not how we look at our network. We do in-depth analysis about the utilization as a percentage and how it is being driven, because if you add too much capacity, but your traffic hasn't grown at the same rate over the period you're looking at, you will see some utilization drop. And we look at it region by region. This is not the level of detail we would like to disclose at this time. But frankly, I'm not sure that would be that useful for your purpose. It's useful for us and for our network development activities, which we're doing by utilizing that data and learning from it. I think what's important is there are more EV sales. Definitely Q1, we saw strong EV sales despite all the challenges. We hope that trend continues. We saw a very great recovery in March, which is indicative of, again, recovery of the users, but also additional EV sales. And we think those are all positive news. The same-stall utilization is a bit of a foreign concept on how we're looking at it, but I'm also not sure that, that's going to be helpful for your overall modeling purposes. But let me know if you would like to unpack it further.

Yes. I mean, Ryan, as I think about it, in a fast-growing market like this, I'm kind of with Olga. I'm not sure what that level of that precision would be useful for, either for you or for us. We tend to look at the overall sort of profitability on a network basis as the number of EVs on the road grows. And that's what actually really, really matters to us at the end of the day.

Any color just on regional utilization overall versus last year?

Sure. I mean, look, as we talked about in our last call, California is profitable. And we have a number of other profitable regions that are interesting like Portland, Denver. What were the other cities that we highlighted?

Phoenix.

Phoenix is a great market. And I would venture to say that a year ago, that wasn't the case. So that is absolutely a function of the penetration rising in those metropolitan areas and us having a good stable of chargers to meet that demand.

Our next question comes from Andres Sheppard with Cantor Fitzgerald.

Congrats on another great quarter. I was just wondering if you could maybe expand a little bit on the revenue seasonality for the remainder of the year. And you've reaffirmed guidance, which is great. I'm just wondering, should we kind of assume the next 2 quarters to continue to ramp up and maybe Q4 to be a little bit less than the previous ones, or better to kind of assume increasing revenues quarter after quarter?

Olga, that's you.

That is a good question. We are currently managing both seasonality and the rate at which electric vehicles are being integrated into the network. In certain months when a significant number of EVs are added, it can obscure the effects of seasonality, and the opposite can also happen. It's not always straightforward, as sometimes the addition of EVs may be low while seasonality reflects a high volume, resulting in an average month. These two factors interact with each other. We have some ideas on how EVs will be incorporated into our network, but that is ultimately a forecast beyond our control. Therefore, I would advise caution in predicting that Q2 and Q3 will show significant increases followed by a decline in Q4. There are many scenarios to consider. Generally, we can expect strong performance in the summer due to driving patterns, which should result in some elevation. However, how Q4 unfolds remains uncertain, and it's challenging to predict at this point.

Got it. No, that's very helpful. Appreciate it. And maybe for my follow-up, I'm wondering if you could maybe expand a little bit on EVgo eXtend. I think it's a very interesting addition to the business model. And so I'm just wondering if you can maybe add a little bit more color there, or when should we expect to hear more about it? When does that kind of start to ramp up? Any color there would be helpful.

Sure. We previously discussed EVgo eXtend, but for those who may not be familiar, EVgo eXtend is a branding for a service we offer where we identify suitable sites to construct and operate chargers, although the site hosts own the assets. There is a significant opportunity here. EVgo only builds sites that deliver double-digit returns, which heavily depends on utilization. With the Biden infrastructure funding aimed at rural areas and corridors with potentially low short-term utilization, many site hosts are keen to be part of the electric vehicle charging infrastructure. We can expand our presence by adding these stations to our geographic footprint without taking on the risk of utilization, while still earning revenue. EVgo eXtend embodies this business model, allowing site hosts to have EVgo-operated chargers at their locations, with us managing the construction and ongoing connection to our network. This model creates a positive revenue stream for us. As I mentioned in the last call, we're in advanced discussions with several interesting partners, and we're excited to share the details once those deals are finalized. This is a fantastic opportunity for EVgo to broaden its reach and enhance our revenues while minimizing utilization risk in areas where we aren't fully confident about the performance of the business model. We'll keep you updated as soon as we have more specifics to share.

Congrats on the quarter.

Our next question comes from Bill Peterson with JPMorgan.

Yes. Nice job on the quarterly results. My first question is, you mentioned the accounts increased to, I guess, approximately 375,000. Looks like a 30,000 increase. Can you share how many customers came as a result of OEM and rideshare customers? And I guess the second part is looking ahead, I'm curious on the repeat business from customers that have accounts through OEM partnerships. For example, can you share any metrics of customer usage of car owners such as, I think like Nissan Leaf, where the first year credit goes away and expired. Just trying to get a feel for the stickiness of the business as we think about these partnerships.

Olga, you want to take this one?

The vast majority of the 30,000 to 35,000 customers are retail customers. We don't provide the exact breakdown between OEM and regular retail, but retail accounts for a significant portion. The number of fleet customers, particularly those involved in rideshare, is quite small, but they generate a considerable amount of traffic, which gives them a notable impact. For now, I would consider it to be mostly retail. Could you please repeat your second question? I had difficulty understanding it.

Yes. You have a lot of great partnerships with Toyota and Subaru and older ones like with Nissan. But I think I remember Nissan, I think it was like a 1-year program. So they come off, right? I kind of sort of understand like, do these guys stick with EVgo after their sort of complementary charging comes off?

Yes. So the Nissan was a 3-year program, so one was one extension. But yes, absolutely, they do stick around. We see this in our data. It's a great acquisition channel. It's early to say with Subaru and Toyota because those cars are not circulating now in our book yet, but we do expect the same effect. And we expect the same effect from our General Motors customers. When General Motors starts really selling their cars en masse and all of our contracts will get the full use, we will see the same effect. So we love those partnerships precisely because it's a great sales channel because early data shows us that people do stick with their initial charging provider.

I have a question about seasonality, particularly regarding the LCFS credits. I understand that you're expecting a significant portion to come in during the first half of the year. How should we model this for the full year? Additionally, looking at the longer term, it seems we should expect some compression. Could you provide any insights on the other areas of your seasonality that aren't related to charging?

Yes. It has become easier to model that business line now because we used to recognize LCFS revenue from regulatory credit sales two quarters after those credits or kilowatt hours were generated. We now have an agreement with a third-party provider where we record revenue one month after it's generated. This allows us to consider it as immediate. The revenue depends on the kilowatt hours generated in California, which typically hovers around 65% to 75%. It varies, but remains in that range. The revenue we record will be proportional to those California kilowatt hours. In the first and second quarters, we're using both methods: recognizing California kilowatt hours as they come in and selling the balance from past quarters, which results in slightly elevated numbers in Q1 and Q2. However, in Q3 and Q4, it's straightforward; California kilowatt hours represent a certain percentage of the total, correlating to the amount of credits and revenue we book proportionally.

Our next question comes from Oliver Huang with Tudor, Pickering, Holt.

The current year-end target for under construction and operational DC fast chargers implies a fairly steep ramp. And I know it's tough given certain timing aspects that are beyond your control. But was hoping to get a bit more color on the expected cadence of installs and construction as we kind of move through the rest of the year. Anything really that might help provide the market confidence in being able to achieve your reiterated full year charger count outlook from this morning?

Yes. I believe we need to examine the entire process from start to finish. We have a significant engineering and construction pipeline that will eventually lead to mobilization and energization by the utility. The situation indicates that the momentum is building. When we initially became a public company, we shared that it typically takes about 18 months from the initial idea of establishing a charging station to the point it is energized, and I aim to reduce that timeframe to 6 months, though we haven't achieved that yet. However, we are beginning to see progress in many areas. With our outstanding performance in March and the collaborative efforts of all involved parties, from utilities to local governments to site hosts, we are optimistic that this momentum will continue to grow and help us meet our year-end target. We feel confident in our progress due to the robust pipeline and the increasing speed at each stage of the process. While construction still takes 4 to 8 weeks, we are managing the factors involved in contract signing and utility energization timelines, which is encouraging news.

That's very helpful. And for a second question, just operationally, any color on what the average rate of acceptance that you're seeing today relative to what you all kind of spoke to last summer. Just kind of given the greater mix of upgraded EVs, has there been more of those entering the vehicles and use mix and just the higher powered capability of your newer charger adds? And any change in terms of the timeline of being able to hit that 80 or so threshold?

Rate of acceptance? Sorry.

Yes, the rate of throughput that you're seeing on average. I think you all spoke to it being in the low 30s previously in the summer of last year.

We are observing a steady increase in charging growth month by month. This morning, I reviewed an analysis indicating that the charging rate for individuals who joined in the last five months is approximately 15% higher compared to earlier users. Additionally, when we examine the charging rate for our higher power 350 chargers, which we are primarily deploying now, the rate is nearly double—slightly less than double—compared to the 50-kilowatt chargers. We definitely anticipate an increase in charging rates as new models are introduced to the market and become more prevalent. Everything is proceeding according to our plans.

Our next question is from Noel Parks with Tuohy Brothers.

I just want to touch on a couple of things. And I apologize if you touched on this earlier, but I was curious if you could talk about the sales cycle for the fleet market. And I wonder, within the organization, is there a dedicated group or team that has that as its primary focus, or is it essentially within just the broader sales effort?

We have a dedicated team focused on fleet business development, and many members are currently at the ACT conference in Long Beach, which is an annual gathering for anyone involved in fleets. The sales cycle for this market does tend to be longer for a few reasons. Until recently, many fleets were unable to access electric vehicles and had been waiting on the sidelines, not prioritizing infrastructure until they had their vehicles. However, they have now realized the importance of planning both aspects simultaneously. Many are either conducting small pilots or issuing requests for proposals. EVgo has been quite busy in the past few months responding to these RFPs, which is a time-consuming process. We have many potential opportunities, and we will be eager to share updates when they arise. The feedback we receive when demonstrating our EVgo Optima software and when fleet providers visit our innovation lab near LAX has been extremely positive. Our experience in operating a public network, where our financial success relies on maintaining operations, is proving advantageous as fleet providers evaluate partnership options for electrifying their operations.

Great. And I wanted to turn to the big pile of money that is the federal infrastructure bill. And I've been hearing a little bit here and there about the process. I guess the rules have gone out to the states that they can then use to sort of come up with their own sort of allocation and distribution criteria. Could you talk about that? And I'm just curious if in your own modeling, you started to envision a time horizon when that funding will actively be in play.

Yes. At EVgo, we leveraged our experience in working with the federal government prior to the release of the guidelines in March. We believe that the general guidelines issued by the federal government are well-informed, even though they are not strict rules but rather suggestions for the states. Currently, we are collaborating with the states as they design their more detailed programs. Our market development and public policy team is optimistic that most states are considering real-world scenarios that will contribute to the success of electrifying transportation. We hope that the upcoming program designs from the states will be rooted in what is likely to be effective. As for timing, as mentioned earlier in the call, we do not anticipate the funding to be available until at least the end of this calendar year. We haven’t included it in our projections because we believe that before then, there are grant programs at the state level and with utilities that we can access and incorporate into our plans for this year. The federal funding, once available, will be an added benefit.

We have reached the end of the question-and-answer session, and this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.