EVgo, Inc. (NASDAQ:EVGO) Third Quarter 2022 Results Conference Call November 2, 2022 5:00 p. m. Eastern Time
Participating companies
Heather Davis – Vice President of Investor Relations
Cathy Zoi – Executive Director
Olga Shevorenkova – Chief Financial Officer
Conference Call Participants
Gabriel Daoud – Cowen
Gavin Kennedy – Jefferies
Jon López – Vertical Group
Stan Shpetner – Pickering Energy Partners
Operator
Hello and welcome to EVgo’s third quarter earnings call. All lines have been muted to any background noise. After the speakers’ comments, there will be a question and answer session. Instructions will be given at that time. I would now like to pass the floor to Heather Davis, Vice President of Investor Relations.
Davis heather
Hello everyone and welcome to EVgo’s third quarter 2022 earnings call. My call is Heather Davis and I’m the new director of investor relations at EVgo. Today’s Call
Today we will discuss the monetary effects of EVgo for the third quarter of 2022, followed by a Q&A session. Today’s call is transmitted over the Internet and the call and accompanying documents are available in the Investors segment of our online page in inverter. evgo. com. The call will be archived and will be held there with the publication of the company’s effects and the presentation to investors after the end of the call.
During the Call, management will make forward-looking statements that are subject to threats and uncertainties, adding expectations related to long-term performance. Factors that may cause actual effects to differ materially from our expectations are detailed in our SEC filings, adding the threat points in our most recent annual report on Form 10-K and in our next quarterly report on Form 10-Q that will be available in the investor segment of our website. These forward-looking statements are effective today and we take no legal responsibility to update those statements after the call.
Please also note that we will refer to certain non-GAAP monetary measures in this call. Information on those non-GAAP monetary measures, adding a reconciliation to the applicable GAAP measures, is contained in the earnings documents found with Investors. segment of our website. With that, I will give the floor to Cathy Zoi, CEO of EVgo. Cathy?
Cathy Zoï
Good morning everyone and thank you for joining us today. Before we start with a quarterly update, I’d like to take a moment to recognize two new additions to our team at EVgo. First, I am pleased to welcome Heather Davis, our new RI leader who introduced our call today. Heather brings 20 years of experience in investor relations and corporate finance. I know everyone would like to join her sooner.
Secondly, we recently hired a new Chief Revenue Officer, Tanvi Chaturvedi, who joins us from Google. Tanvi will accelerate our retail profit expansion by transforming the fast-charging user experience. As CRO, Tanvi will lead our go-to-market functions, aggregating all customer revenue expansion, marketing, advertising, expansion and use initiatives of the PlugShare app.
Prior to joining EVgo, Tanvi held leadership positions at Google, most recently responsible for developing and monetizing the Google Nest Wise House portfolio of products and services. Previously, he also held control positions at Procter companies.
Let us now turn to a room. EVgo had a strong quarter as we continued to leverage our technology-driven technique to dominate the ultra-fast EV charging market. On today’s call, I’ll talk about some issues for the quarter that we see as key drivers of growth.
First, the strength of our operating base. Second, our strong advertising growth, as we move forward with new and existing partners. Thirdly, our commitment to generation as a source of progress and innovation. in the EV charging area in 2023 and beyond.
Today, nearly 140 million Americans live within 10 miles of an EVgo charger, a testament to the foundation of operational excellence we’ve established to drive our expansion now. Our presence continues to grow across the country and we are excited to see momentum accelerate as more Americans adopt electric vehicles.
In fact, we recently announced that we’ve surpassed 500,000 visitor accounts on our platform. The third quarter of 2022 saw a record number of electric cars sold in the U. S. The market share of electric cars continues to grow each quarter and we expect those trends to only increase as we get closer to 2023.
Reuters recently calculated that the world’s top automakers plan to spend around $1. 2 trillion through 2030 to expand and produce electric vehicles. This is a double accumulation of the estimates they had projected a year earlier. A major component of this effort is the paints we make about the business side of the business as we continue to increase our component association across ecosystem assets.
On the fleet side, we signed a new agreement with MHX Solutions, which is a full-service logistics operation founded in California and our first EVgo Optima implementation for our Class 8 truck fleet. This follows the agreement we signed with a principal investor and application last quarter.
In addition, EVgo has signed a new agreement for a fast charging hub committed to an existing autonomous vehicle fleet partner, as well as an agreement with another AV fleet partner to repurpose an old compromised site to meet its ongoing needs. Really excited about the progress of our fleet business, which is largely due to our technological merit and more on that in a moment.
Building on the momentum created in July, with the announcement of the EVgo eXtend agreement with Pilot, we are pleased to announce that pre-engineered paints have already begun on some Pilot Flying J sites. We also won our first eXtend Workplace acquisition orders to deploy and manage General Motors painter L2 and DC fast-charging stations across 4 other services across the enterprise.
This highlights EVgo’s ability to partner with large advertising organizations for office solutions. As we have shared previously, we are open to owning sites or managing them on behalf of others and, in many cases, it is better for us and our spouses to own the shippers. In this case, GM will offer exclusive benefits to its workers who depend on EVgo to install and operate the chargers.
Keep winning: The charging infrastructure is that of the site, as we have signed several new agreements with national brands that will provide EVgo with access to high-quality homes in prime locations across the United States. These come with our agreement with Lowes Home Improvement Center.
In addition, we have expanded the footprint of our existing site in several major supermarket chains, adding Kroger, Safeway and WinCo. We’ve also pushed the first of many Target Progression sites now available in the EVgo app and PlugShare. The addition of new national retail host partners in the home, supermarket and dining renovation industry, complemented through extensive engagement with several of our existing portfolio partners to particularly build EVgo’s portfolio of resort projects in the United States.
In fact, when we overlaid express shopping locations to those well-known brands with EVgo’s proprietary networking plan tool that takes into account the many points that make charging infrastructure a pencil, we added approximately 10,000 potential charging stations that exceed our initial in-house investment and may only be added to EVgo’s progression pipeline.
This expanding portfolio of high-end stations with strong unit economics combined with a cost-sharing outlook will generate long-term revenue. Federal Hub offers EVgo the opportunity to invest extensively in capital to expand our footprints to new locations, which is consistent after quarterly 10-Q filing, EVgo plans to register as an add-on where it recently registered S-3 to facilitate secondary market sales of up to $200 million of our non-unusual stocks.
We plan to use the proceeds from this ATM program to opportunistically raise more capital to leverage this and accelerate the electric vehicle infrastructure sector.
As for our performance, again, the issue of that expansion and execution. During the quarter, sales and operations or structure exceeded 2,625. We added a record 188 booths this quarter and since the start of the year we have activated 487 new booths. In our network, 2. 4 times more than in the same was last year.
In addition, our engineering and asset structure progression reached its highest point with 4,534 booths. As a reminder, we must invest in the expansion of our network, we also remain focused on the general profitability of the activity and projects that eliminate our internal rate of return or margins.
The most important factor we face in the installation aspect right now is time in the application aspect. By the end of the quarter, EVgo had installed more than 130 cabs still waiting for power, more than a hundred of which were delayed due to more than six weeks. Unfortunately, the scarcity of application-specific hard work and processor origin chain limitations exacerbate delays in application processes upstream and downstream of the sender progression process.
We anticipate that those implementation-related delays will continue to be a factor as utilities prepare for transportation electrification and work to make electric power resilient to the effects of climate change. EVgo will continue to work collaboratively with our application partners and local governments to address those factors. Those demanding situations can be satisfied through the execution of one aspect to another.
Throughput this quarter 12. 1 gigawatt hours, a 51% increase over the third quarter of 2021, driven by continued adoption of electric cars in the U. S. The creation of improved electrification of ridesharing. The first component of 2022, due to the number of electric cars available to rideshare drivers, Uber and Lyft have indicated that their electrification plans will be boosted in the future.
Uber recently said the company aims to double the number of electric cars on the road over the next year, from 25,000 to 50,000, as it tries to go electric by 2030. They drive about 3 times more than average.
On the retail side, we are encouraged by recent developments on the OEM side. Despite the difficulties some of our OEM partners faced in bringing parts to market earlier this year, the long term is brilliant. Cadillac began shipping its new Lyriq model, sales of Chevy Bolt and Bolt EUV resumed following the battery recall fix.
And Toyota and Subaru reopened sales of BZ4X and Solterra following their recall. We expect to see greater contributions from our long-term partners and continue to see an expansion in Tesla driver charging on the EVgo network, which brings me to the subject. of technology.
Simply put, EVgo is a generation powerhouse. This is our key differentiator and sets us apart. Our investments to create seamless integration between EVgo hardware and software aimed to create a differentiated experience for our customers, as well as superior price margins for our investors and other stakeholders.
We heard from our B2B partners that EVgo pioneered features that no one else has. An example of this is Autorate, introduced in September nationwide, Autorate sets a new standard for a simplified EV charging experience by simplifying the procedure between a fee and a payment session.
Once EV drivers have self-registered in the EVgo app, they can initiate a charging query at an EVgo station without a credit card, RFID, or even swipe the app on their phone. In the few weeks since our launch, we’ve noticed spikes and positive feedback from new and existing drivers taking advantage of this faster and more convenient program.
In particular, as AutoCharge is also available for Teslas, EVgo is pleased to welcome more Tesla drivers to our network. On the fleet side, as I mentioned earlier, our generation here is a real game changer. EVgo Optima is our proprietary cloud based on a software platform that is helping to ensure that electric cars in the fleet are billed in a way that optimizes logistics desires and fleet operating prices.
The user-friendly interface gives fleet managers simple access to maximum vital knowledge, while the built-in visitor service provides seamless communication to help ensure fleet availability and service point agreements around them. Initial feedback from fleet managers has been overwhelmingly positive, as EVgo Optima was designed from the ground up as a leak-focused application rather than as a repurposed adaptation of motive power software like this introduced by some of our competitors.
On the OEM front, we continue to work with our partners to leverage EVgo’s internal API, which is designed to integrate seamlessly into an automotive logo application. This allows an automaker to offer its consumers a fully built-in EVgo charging experience without switching between applications. We’re really ahead of the market here.
And finally, we are proud of our efforts to advance the electric vehicle charging industry in terms of global criteria and interoperability testing. De facto fast charging standard.
And our EVgo Innovation Lab is a benchmark for OEMs that are creating new electric cars and for brands that are creating new appliances to charge new electric cars. In fact, in addition to an important EVgo lab location in El Segundo, California, places on OEM premises. This distributed technique allows automakers to check cars much earlier in the complex, even before a prototype, and then successfully launch them.
EVgo has retained access to the verification software and remotely manages the procedure for the OEM design and go-to-market procedure.
Regarding slide 8, you’ll find a brief update on the National Electric Vehicle Infrastructure Program, or NEVI. Last September, the U. S. government was in charge of the U. S. government. The U. S. approved all 50 states plus Washington D. C. and Puerto Rico, the states are now eligible to launch the process via fiscal year 2022 and fiscal year 2023 of the funds allocated.
The first investment founded in fiscal year 2022, which totaled $615 million, will help build EV chargers that will cover approximately 75,000 miles of road. We expect the first state applications to take position this quarter or the first quarter of 2023 with the initial investment for 2023, which will be based on public procurement, bidding processes and finalization of federal minimum standards.
In addition, tax credits to reduce inflation after the IRA and, in particular, adjustments to the US 30-C code are not limited to the IRA. The U. S. is a tailwind for our industry and operations. We are pleased with those advances and they will reduce carbon emissions as the world continues to embrace electricity. That said, we expected it to take some time to identify the benefits in our monetary performance, as the Treasury Department conducts group data before issuing guidance on the main points of how the 30-C tax credits will apply.
Other key provisions of the IRA, which add revisions to the 30-B Consumer Tax Credit on Electric Vehicles, the 25-E First Use Tax Credit and the 45-W Commercial Vehicle Tax Credit, are also expected to help accelerate EV adoption with some payment implementation practices also pending IRS advice. We believe 30-C and other IRA tax credits will gain EVgo advantages. But we expect to realize that they gain financial advantages in the very short term.
As one of the oldest, largest and most trusted public fast-charging operators in the United States, EVgo’s project is to drive mass adoption of electric cars for everyone. This quarter, from this project, EVgo presented the national electric vehicle. Connect the WattsTM Charge Recognition Program. This program will recognize leaders in the electric vehicle charging ecosystem for their achievements in driving transportation electrification.
By spotting those leaders, EVgo hopes to inspire awareness of the grid running to electrify our transportation system.
And with that, I’m going to pass the call on to Olga to tell her more about our monetary results.
Olga Shevorenkova
As Cathy mentioned, we had a solid quarter with strong momentum on the execution side as we grew our network. EVgo builds our active pipeline progression of engineering cabins and structure through 82% year over year, achieving a record 4534 cabins at the end. of the quarter, a notable accumulation in quarterly position additions since we announced last quarter’s Pilot Flying debut.
We added 188 new department stores to our network in the quarter and department stores and structure operations totaled 2625 at the end of the quarter. Accounts receivable increased 60% year-over-year and 51% year-over-year. % year-over-year expansion in operational positions.
Regionally, we cancelled and signed millions of revenue in the third quarter, representing a 70% year-over-year increase. engineering paints in the PMJ contract and expansion in PlugShare and sale of regulatory credits.
As expected, we experienced a sequential decline in regulatory credit sales as a result of monetization efforts in the first part of the year. Regulatory credit sales totaled $1. 2 million, a 72% year-over-year increase, but a very broad sequential reduction. quarter by quarter. This, combined with seasonal effects of electric power rates and minimizing LCFS credit prices, contributed to an expected decline in adjusted gross margin.
The reduction in adjusted gross margin from 22. 2% in the third quarter of 2021 to 19% in the third quarter of 2022 is basically due to minimizing LCFS costs this year. costs. As a reminder, our business style has a significant built-in leverage effect that is achieved on fleet cargo volumes.
We reported negative adjusted EBITDA of $22. 2 million to negative $14. 2 million in the third quarter of 2021, reflecting our investments in the other people and infrastructure needed to capture expansion and expand our land.
Capital expenditures were $61. 6 million this quarter as we accelerated loader deployments and executed our long-term strategic plans. As a reminder, all of our charging infrastructure deployments go through a comprehensive underwriting procedure and, with a low double-digit IRR before tax, without leverage at the allocation level.
EVgo has been launched at public charging stations since 2010 and while this has created an unprecedented experience and track record, it also imposes a continuous call on EVgo to meet and exceed our customers’ expectations through a suitable point of investment in network maintenance and upgrades.
EVgo is currently expanding its existing network concession and maintenance program which we call EVgo ReNew. The purpose of this program is to increase charger availability and delight the visitor in our ongoing pursuit of charging leadership. We’ve upgraded 125 cabins since the start of the year and are working with site hosts to compare more cabins in 2023. We focus largely on our legacy protection chargers, traveling through channels achieving the expected end of life.
We apply a rigorous analytical technique to this program with a focus on updating and/or expanding sites in places with higher demand and long-term growth. In some cases, we’ll look to upgrade chargers with higher-powered models or even expand the site. We may also remove a specific charger, cutting off that low-performing site from our network.
Before opening the call for questions and answers, I would like to make a percentage of our operational and monetary direction updated for the total of 2022. First, we are reconfirming the full-year 2022 earnings forecast from $48 million to $55 million. This diversity is shaping our minds through the timing of deliveries of the Pilot Flying J team. We are cutting full-year 2022 adjusted EBITDA guidance to less than $85 million to less than $80 million as we update the year’s speed of hiring.
We are revising our grid performance forecasts for the full year 2022 to 42 to forty-five gigawatt hours. This review is related to delays at some compromised stations in the San Francisco Bay Area. Delays in EV delivery through our OEM partners and recovery of rights stock starting later than expected in the year.
In terms of stations, we expect to have a total of 2800 to 3100 DC fast-charging stations operational or in structure by the end of the year. As Cathy mentioned, resource problems in U. S. municipalities and utilities are not a major one. , fast-charging stations that consume a lot of energy. As a result, we are adjusting stagnation forecasts to reflect those persistent realities in the sector.
It is important to remember that such delays do not have a significant short-term monetary impact on EVgo’s business. Our existing network has the ability to accommodate developing traffic.
With this, I will pass the to the operator for questions.
Q&A session
Operator
Thank you. [Operator Instructions] We’ll take Gabriel Daoud’s first with Cowen.
Gabriel Daoud
Hello World. Good afternoon. And thanks for all the comments ready. Olga, maybe she was hoping to dig deeper just to advise a little more. I understand there could be a decent contribution from Flying J and that’s how she gets the whole year. , but is there any way to quantify the impact of Flying J this year?
Olga Shevorenkova
Of course. So, Gabe, the reason we gave: give the same direction in the $7 million diversity is that the precise contribution of Pilot Flying J will count when the hardware sets are delivered to our center. And lately we are making plans to take this installment in the month of December, which includes a holiday.
And we, the short answer to that, will count and make the difference between 48 and 55. In a precise contribution from Pilot Flying J, this year I would refrain from giving the exact number, because I know the number we reported separately.
But what I would say, what I think would help him, is that the vast majority of PFJ’s profits will come in the fourth quarter. In the third quarter, it was still like a part, it was still small and I think doing the undeniable math that would probably lead to the answer, but we probably wouldn’t reveal that exact number.
Gabriel Daoud
GOOD, GOOD. Thank you Olga. Es helpful. And then, in general, curious to hear the trends on the fleet side, Cathy, clearly communicated a lot about that in her ready comments, however, can you communicate maybe about partnering with MHX and, like the style of benefit they go with, service or visitor billing?And since it’s Class 8, I guess 350 is that even an interest in megawatt rates or just a little bit of curiosity about how this partnership, I guess if you can just percentage main points there and then generally what do you see on the fleet side?Thank you.
Cathy Zoï
What we see is that, first of all, they are still very early rounds and the fleet can access the vehicles. Well, then there’s a lot, a lot of interest in every fleet, last mile delivery, intermediate mile and now Class 8. , thinking about how they’re going to do that, however, it’s kind of a first-level board or first-level limit for MHX.
Again, business styles vary and, as we have told you many times, we have to own the assets or we are satisfied with having the consumer and whether they own the assets. So, we’re going to point out sometimes that fleets want, at this point, to own the charter, to charge the style of service that we offer where we’re building an upgrade for shippers for them, yes.
Gabriel Daoud
they gave it to me they gave it to me Thank you, Cathy, that’s helpful. Very bien. me I will stay. ‘Ll. Thank you.
Cathy Zoï
Thank you, Dave.
Operator
We’ll take our next Bill Peterson with JP Morgan.
unidentified analyst
Hi, I am [Indistinguishable] for Bill Peterson and thank you so much for answering our questions. Can you elaborate on EVgo’s timelines where replacements are upgrading older chargers?Approximately, how many chargers would constitute and at what speed will they be replaced?? And then perhaps a follow-up, will it have an effect on the rate of new recharge inspirations overall?Thank you.
Olga Shevorenkova
Hello, thank you very much for that question. So, lately we are comparing the number of posts that we will upgrade or upgrade or maybe even retire next year, we are not in a position to give the exact number, however, there will be many and we will update the market as this program arrives. This program will focus on our old chargers, our old 50-kilowatt chargers.
We should also point out that not all of our older 50-kilowatt chargers have inferior performance. Many of them function very well and have no problems, but there is a cohort of other very old people who are near the end of their lives. And those are the ones that have caused us disorders and those are the ones that give us the most.
But what we must also say is that our new program and our visitor delight in the improvement or the visitor improvement program does not only aim to replace or disconnect the chargers. Enjoy visitors, adding the convenience of an app, the convenience of notifications, and a variety of other things that our cross-functional groups focus on.
And we would also like to recall the achievements we have experienced as an industry in our own right, as we have various appliances in our network that charge other car models. So they do it, the challenge is in the hardware, the challenge is in the software, however, the challenge is between the new cutting-edge cars on the market, the new cutting-edge chargers in our network and the network of our competitors.
And what sets EVgo apart is that we have our lab where we can test various gadgets in combination with various electric cars and that had already given us a smart head to start with and we will continue to do so and even import next year the importance of overall The experience of the visitor who has returned helped through a variety of things, The new updated hardware, operational maintenance practices, software convenience and overall convenience of the visitor experience and its laboratory control and allowing it to be first class.
unidentified analyst
Thank you very much for this color. And if I can slide any other. And do you still experience inflation on the source side and hard work?
Olga Shevorenkova
We’re still living some of that. We’d like to say that it’s softened on S2 compared to S1. We’re still seeing some of the workload as a result of inflationary pressure, but it’s not at the point we saw in the early part of this year. So we remain hopeful for next year.
unidentified analyst
Thank you.
Operator
We’ll be taking our next David Kelly with Jefferies.
Gavin Kennedy
Hi, I’m Gavin Kennedy from David Kelly. Thank you for answering my question. Can you provide us with more data on the installation factor you discussed in the prepared notes?How many jobs were affected this quarter, and can you quantify the expected long-term construction of the positions in question?And how to think about the limitations of hard work and processors in general until 2023?
Cathy Zoï
He, when we reached the end of the quarter, we had 130, just to go back, EVpass takes between 4 and 8 weeks to build a charging station.
Operator
Our questions come from Jon Lopez’s lineage with Vertical Group. Continue with your questions.
Jon Lopez
Hey, thank you very much. I would have two, if I could. The first, I just sought to return to the debit factor of before, and I apologize, I think a year after its performance is higher between the third quarter calendar and the fourth quarter calendar. Why was it and what would make it different this year?compared to last year?
Olga Shevorenkova
So last year wasn’t necessarily a case study because the increases can be attributed to the relaxation of COVID restrictions in the fourth quarter since my [Indistinguishable] in California, where it doesn’t happen 70-75% of every time it happens here. In California. De memory, the vast majority of the fourth quarter seemed like an improvement and restaurants were opened and other people started going out on the street and so on.
And then, at the end of the fourth quarter that started in the first quarter, they brought new restrictions because there was a new wave. So, you wouldn’t necessarily look at 2020 and infer general patterns from it, as they were greatly affected by what was going on. with COVID.
Jon Lopez
Gotcha. Okay. Who helps?Thank you, and at first point, I wanted to go back to GM’s comment, so I’m sorry, I probably wouldn’t have understood all of this, but I think I heard you say you’re superior in the industry. sets of quasi-costs in the long run for some sets at a lower cost, in the long run, as extra in time.
Could I just flag assuming I dialed, such as what adjustments in the charge profile and see if the dollar price of this commitment is different or is the same dollar price, but only a higher number of chargers?
Cathy Zoï
yes, Jon, no, you didn’t hear right. Remember that the principles of EVgo are, we will invest in the charging station where it is charged, and one of the key elements, there are many entries on what makes it pencil, CapEx, etc. , rent. But one of them is, what will be the use of this station?So when you build stations, or in the early years, when there are fewer electric cars on the road, you need more cash elsewhere, if you’re going to build them.
So if it’s structured in 2021, the subsidy consistent with the station required through someone and, in this case, GM, is higher. If you build in 2023 after dozens of other electric vehicles, if it’s the market and then sold, then the subsidy required to make a charging pencil is much, much less. So what we were going to do, for the same $90 million contribution from GM, we were going to build 500 more charging stations during the last few years of the structure program and structure the total VAN.
Jon Lopez
You’re helping Cathy, but I’m sorry, the overall dollar commitment between you two hasn’t changed and the charger counts more?
Cathy Zoï
Yes, I did.
Jon Lopez
It is ok. they gave it to me Well thanks. Enjoy.
Operator
Our questions are from Stan Shpetner of Pickering Energy Partners. Continue with your questions.
Stan Shpetner
Hi, thank you for answering my question. As for fleet sales, as it continues to draw on the fleet over time. First, do you maintain your long-term purpose of bringing your fleet’s performance to about 2/3 of your overall performance and, as this trend continues, do you expect to see a sequential expansion of earnings slightly behind your rate of performance expansion?
Cathy Zoï
Olga, do you want to take this one?
Olga Shevorenkova
Of course. Not necessarily in the long term, in the short term, you might just see those fluctuations and they just happen anyway. You can see profits grow faster than performance when we open new compromised locations, they start paying us for all the retail. The points of sale are open, but it takes time for our partners to build their capacity.
So you could see, again, if you look at quarter-to-quarter gains over the next two years. Therefore, profits have increased but not performance or vice versa. In the next quarter, you’ll see, for example, that profit hasn’t increased much, but performance has increased because you’re now expanding capacity. If they have a long-term view, they deserve to go hand in hand. We don’t see much overlap if you take a step back and look at it. in the multiannual line.
Stan Shpetner
So if you think in terms of value, is the value of your fleet rarely a reduction compared to what qualifies in retail and would that affect the average value in the future?
Olga Shevorenkova
If you take a look at the company, in general, yes, you will have just that. If you only take the overall performance in kilowatt hours compared to the overall gain, because the consistent value with kilowatt hours for the fleet is less, you will realize that this is a fact. If, on the other hand, [Indistinguishable] you will see a more or less equivalent evolution between profit and debit.
Stan Shpetner
Just a sequel. Given that you plan to be able to integrate additional and consumer-related fleet gains in the medium and long term, what do you think of the fleet’s profit margin profile in relation to your retail business?
Olga Shevorenkova
We haven’t passed that on to the client this year, but conceptually, that’s how we think about it. But when we think about passing it on to the customer, we don’t just think about margins, we think holistically. I made a tax on the chargers that were returned to us and, at the same time, if we have a higher use in certain positions compared to what we expected, in the future, we will be able to reduce the prices of the appliances and so on.
That alone can also solve the challenge of emerging energy charges, and we don’t have to pass it on to the customer. But that’s possibly not the case and that’s going to be the moment when we pass it on to the customer and just a reminder about our values, we weren’t scoring, we didn’t object to it and it has a unique value consisting of gallons and adjusts every day and tracks the total rate of fuel values.
This is how we technique it. We technify this a bit on the customer side and the supply/demand side and there are other customers with other costs and titles and there are other customers with other appetites for subscription types or pay-as-you-go fees that we face and continue to innovate around them.
So again, even if we say we pass to the consumer, it doesn’t affect me like a margin at every pump. Our pricing formula is more complicated than that and will only get more complicated over time, adding your location and the pricing time used that we’ll have some levers to pull, let’s say we can make a more expansive rate at 6p. m. y less expensive at 8 a. m.
Here’s how we technique it to literally give context for how costs pile up and what’s beyond the consumer. Therefore, it will be more complicated than it seems.
Stan Shpetner
Impressive. Thanks for the color.
Operator
And that concludes the response session. I would like to call Cathy Zoi again for any additional or final comments.
Cathy Zoï
Look, our commitment to technology innovation fuels our relationships with our consumers and whether it’s Autoload for Drivers on our public networks, our APIs for car brands or loose consumer advertising software, EVgo is positioned to deliver an exceptional and reliable fast charging experience in and make our market leadership bigger.
We are excited about the development momentum in the electric vehicle landscape. I think you can hear it in Olga’s voice and in my voice, and EVgo is uniquely placed to take advantage of the electrification of travel. So, thank you all for joining us. Big questions. I love listening to how we do.