EVgo ready to buy charging firms as key tax credit expires

EVgo Inc., one of America's biggest charging companies, is open to buying its rivals as the end of a key federal subsidy adds further strain to the struggling industry, according to Chief Executive Officer Badar Khan.

"If there's an opportunity for us to deploy capital that provides compelling returns for shareholders through M&A, then of course we're going to look at it," Khan said in an interview at Bloomberg's headquarters in New York. EVgo is "very focused" on growing organically and not interested in poor quality assets, such as 50 kilowatts chargers that are slower. Those chargers are being removed from its existing sites, he said.

The charging industry has faced several challenges: the imminent expiration of federal tax credits for electric vehicles, slowing EV sales and competition among station operators. And some companies are grappling with bloated inventories and weak sales.

The industry landscape is fragmented, according to Khan. He said he wishes there were more companies "in the space that had bigger scale, had financing that we had, were focused on the customer experience and reliability."

While EVgo faces competition from operators of fast-charging stations, it's fared better than some peers because it focuses on selling power to electric vehicles, said Peter Lau, an analyst at Bloomberg Intelligence. ChargePoint Holdings Inc. and Blink Charging Co., meanwhile, have relied heavily on equipment sales, he explained.

EVgo's shares have increased about 12% this year, while ChargePoint's have fallen about 50% during that same period. ChargePoint elected to do a reverse stock split in July to remain compliant with New York Stock Exchange listing requirements. Blink may be a candidate to follow suit to avoid a risk of trading below one dollar for a long period of time, Lau said.

ChargePoint's software business will drive growth for the company, a spokesman said. It's also beginning to roll out chargers that enable power to flow to and from the grid and EVs.

A Blink spokesperson didn't immediately respond to a request for comment.

For EVgo, the use of its chargers has jumped fivefold in the last three years, Khan said. The company had more than 4,300 operating fast charging stalls at the end of the second quarter.