This article has been revised from the original version.

Sawtelle-based electric vehicle public charging station developer EVgo Inc. should be a dream company for investors. 

Contract orders for charging stations have come in at a steady clip, giving the company a pipeline of some 3,500 stations. That’s more than the 3,100 stations the company has either already deployed or are under construction. The driving force is a five-fold increase in the number of electric vehicles on the nation’s roads to 2.2 million last year compared with about 400,000 in 2018, according to an Experian consumer trends report.

And with $7.5 billion in  federal infrastructure dollars about to roll out specifically targeted to building 100,000 new public charging stations nationwide over the next two decades, as well as the state racing to complete its charging network before a zero-emission vehicle mandate kicks in by 2035, there would seem to be plenty of work and funds available over the next decade for companies like EVgo.

Yet investors have soured on the company. Since reaching a peak of $12 last August, EVgo shares have lost roughly two-thirds of their value, closing on July 25 at $4.02. In that same period, the overall Nasdaq market, on which EVgo shares trade, has gone up 8.4%.

So why are investors so bearish on EVgo?

According to one equity analyst who follows the company, the answer comes down to two words: execution and Tesla.

Craig Irwin, senior research analyst at Newport Beach-based Roth MKM, points to EVgo’s ongoing cash-burn issues, as the company is spending far more to build out and maintain its charging network than it’s taking in with revenues. Last year, operating losses totalled $149 million (larger than the $90 million in losses for 2021), and the first quarter of this year was even worse, with an operating loss of nearly $43 million.

Irwin said EVgo – and the entire industry – has been hit with supply-chain issues and delays with hookups to local electric utilities, particularly in the last couple of years. The utility hookups often involve installing additional transformers to accommodate the extra juice that charging stations with multiple stalls require.

“EVgo’s guidance was probably a bit rosy in how fast it could bring all these new stations online,” Irwin said.

Despite these issues, EVgo executives in their most recent earnings release and conference call highlighted how quickly new EV charging capacity has been brought online.

“EVgo is investing ahead of the mass adoption of EVs in the United States and installed a record number of new stalls during the quarter,” said Cathy Zoi, EVgo’s chief executive.

Irwin pointed to another issue: EVgo is spending considerable capital maintaining existing EV charging stations and upgrading many of them to accommodate the latest in fast-charging technology. That includes installing new connections, both for the charging stalls and to the cables that are inserted into the vehicles.

“This is more of a messaging issue than a substantive one,” he said. “The company isn’t doing a good job communicating with investors on just how much is it doing in this area. That feeds the perception that EVgo is lagging behind on execution.”

The company went some distance toward closing this messaging gap with an announcement in January of a program called “EVgo Renew,” which it billed as “an enhanced and comprehensive maintenance program designed to ensure stations across EVgo’s charging network meet its quality and technology standards. Through the program, EVgo plans to replace, upgrade, or in some cases retire, hundreds of stations over the coming year with the goals of enhancing charger availability and building range confidence for EV drivers of all types.”

Irwin said the investor community is awaiting more transparency on how much all this is costing.

Reliability concerns

But the need for this program also underscores an uncomfortable perception held by current and potential electric vehicle consumers: the concern that when they pull up to a public charging station, one or more of the stalls may not be in working order, potentially leaving them stranded.

That concern was highlighted in a survey earlier this year from Miracle Mile-based nonprofit advocacy group Plug In America. According to the survey, this concern was most acute for public EV charging stations like those EVgo is building out. 

The survey compared EV consumer perceptions of individual company charging networks. According to the survey, 21% of respondents using public charging networks cited broken or otherwise non-functioning charging stalls at EVgo stations as a major difficulty or dealbreaker for using EVgo’s charging network. While that was slightly better than for Campbell-based rival ChargePoint Inc. (25%),  it was far worse than for Austin, Texas-based Tesla Inc.’s “supercharger” network. Only 4% of survey respondents indicated concerns about major difficulties with Tesla’s network.

Tesla’s emerging dominance

And that leads directly into what analyst Irwin cited as the other major concern investors have had with EVgo: the perception that Tesla is the leader in the electric vehicle charging market and that its charging network is so superior to any other charging system in terms of access, speed and reliability that it will solidify its hold as the dominant player.

“Basically, there is a lot of (investor) pessimism for any company in this space that’s not named Tesla,” Irwin said.

A Tesla supercharger is capable of providing an EV with 200 miles of driving range with a 15-minute charge. That’s comparable to an EVgo fast charger, which can deliever a range of 150 miles with a charging time ranging from 8 to 12 minutes. 

But according to its website, Tesla has deployed more than 45,000 supercharger stalls globally, with nearly 18,000 of those in the United States. That compares with EVgo’s deployment of roughly 3,000 charging stalls at 900 stations in 60 metropolitan areas across the nation. 

What’s more, earlier this year, Tesla announced plans to open 7,500 of its supercharger stations to non-Tesla owners on a permanent basis by the end of next year. At least initially, non-Tesla EV owners will pay higher rates and the charging process may be a bit more complicated than Tesla owners face.

And last week, a new challenge appeared to emerge for EVgo.

Seven major automakers announced July 26 they plan to form a joint venture that will be tasked with building 30,000 EV charging stalls across the nation by the end of this decade. The goal is to build out a network to rival Tesla.

The seven automakers – BMW Group, General Motors Corp., Honda Motor Co., Hyundai Motor Co., Kia Motors Corp., Mercedes-Benz Group and Stellantis (which includes Fiat/Chrysler) – did not specify a name for the joint venture or how much they would invest. 

Also not clear from this preliminary announcement is what role – if any – independent EV charging companies like EVgo will have in this buildout.

Partnerships and grants

EVgo has for a few years now formed partnerships with major automakers and others to build out its fast-charging network as rapidly as possible. In November 2021, the company announced a partnership with Detroit, Michigan-based General Motors to build about 2,750 fast-charging stations nationwide by 2025.

Earlier this month, EVgo announced it has received a contract for $13.8 million from the Ohio Department of Transportation to install 20 fast-charging stations along highways in that state. CEO Zoi said in that announcement that as more federal infrastructure grants for EV charging infrastructure roll out, EVgo is well positioned to snag other similar contracts.

And through its aforementioned EVgo Renew program, the company is also upgrading many of its older charging stations to accommodate higher kilowatt capacity fast-charging pumps. 

But EVgo has a long way to go to catch up with Tesla’s supercharger deployment. And if Tesla were to make more of its superchargers available to other EV users, that could take away more current and potential customers from EVgo.

For now, EVgo maintains its network is more flexible and open to a wider range of EV drivers than Tesla’s network. And in a statement provided by company spokeswoman Katie Wallace, EVgo intends to play up its pricing advantage.

“EVgo is the only public charging provider that offers a rewards program,” Wallace said. “We also offer multiple subscription plans starting as low as $0.99/month, so customers can choose their charging experience and unlock lower pricing by signing up for a subscription.”

And, in an attempt to turn the tables on Tesla, Wallace said EVgo has installed Tesla adapters at its charging stalls that can allow Tesla drivers access to its lower pricing. Tesla’s basic charging subscription rate is $13 per month.

Whether these steps are enough to turn investor sentiment around remains to be seen. A major test will come later this week when EVgo announces second-quarter earnings.

Analyst Irwin said that he will be looking not only for more transparency on what EVgo is spending to maintain and upgrade its existing charging stations, but whether it can begin to get its cash-burn rate under control.