EVgo, Inc. (EVGO) Q1 2022 Earnings Report, Transcript and Summary

Greetings. Welcome to EVgo First Quarter of 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ted Brooks, Investor Relations. Thank you. 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, demonstrates 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. 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 in 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, Mass 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 continue 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, EVO 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 & 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 provide 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 location 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 has 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 begin with a review of the key operational highlights. As Cathy noted, stalls in operation or under construction were 2,110 at the end of the first quarter with a total of 1,772 stalls being in operation and 338 under construction. This total is a 23% increase from the first quarter of 2021. Our active engineering and construction development pipeline more than doubled year-over-year to 3,344. Altogether, during the first quarter, we placed stalls into operation in 12 different states. For example, aside from California, we have been active in Michigan, Ohio and North Carolina, to name a few. We're extremely focused on accelerating the pace at which sites are selected, developed, constructed and commissioned, while making sure that we retain our profitability and return targets. EVgo continues to work collaboratively with others in the charging ecosystem -- utilities, government, site hosts and equipment suppliers -- to get the charger development flywheel spinning. And as illustrated by EVgo's banner months in March, we are making progress and shrinking those development time lines. In parallel, though, we're implementing a variety of process improvements internally that are already bearing fruit in terms of cost and time savings. Notable among them is the use of drones to speed up and automate part of the site survey process. By increasingly utilizing drones instead of physical onsite walks, EVgo can achieve the same or better information accuracy at a much lower cost. As a result, our overall survey activity in the first quarter increased by almost 25% as compared to the fourth quarter of 2021. Network throughput was 8.0 gigawatt hours for the quarter, with March being our highest throughput months in the history of EVgo. As a reminder, vehicle miles traveled for both IC and electric vehicles have some seasonality with the spring and summer being the biggest time on U.S. roads. Volume tends to fade in the following winter, usually bottoming out in January and February. While we saw a repeat of that trend in this year's first quarter, coupled with the omicron spike at the beginning of the year and fleet throughput volatility, we still delivered network throughput that was 95% higher than the first quarter of 2021 as more consumers in the U.S. transition to EVs and the COVID recovery continues. Turning to financial results. We reported $7.7 million of revenue in the first quarter of 2022, which represented an 86% increase over the first quarter of 2021. Charging revenue was up 66% over the first quarter of 2021. Ancillary revenue was up 265%. And regulatory credit sales were up 142% over the same period. In charging revenue, retail growth was the main driver, posting a 94% increase. Ancillary revenue continues to benefit from the addition of PlugShare in July 2021. It is worthwhile to dive a bit further into the realized increase in regulatory credit sales during the first quarter. As many of you know, pricing of LCFS credits has come down in the last year. We have historically had a 2-quarter lag between generating and monetizing this credit. But beginning in the first quarter, we have a new trading partnership that allows us to reduce the lag to just 1 month. This means that for the first and second quarters of 2022, we will be bringing forward 5 months of credit monetization. So you should expect an elevated regulatory credit sales line from us for Q1 and Q2. After that, we expect the line item to normalize. Adjusted gross margin was 37% for the first quarter and benefited from this regulatory credit sale acceleration. Even without the benefit reference, we estimate our adjusted gross margin would have been 29%, an increase of approximately 10 percentage points from the first quarter of 2021. As expected, CapEx has increased materially year-over-year as our pace of charger deployment has accelerated significantly. G&A expenses remain in line with our expectations. We reported adjusted EBITDA of negative $18.2 million, which was in line with our expectations as well. We started the year consistent with the ramp-up as expected and are on track to achieve our financial and operational guidance for full year 2022. We look forward to seeing many of you in the coming weeks. That concludes our prepared remarks. And with that, I would like to turn the call back to the operator to open up the line for questions. Thank you.

[Operator Instructions] 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 over 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.

Maheep, Cathy here. So we do expect overall everything to be ramping back up during the course of the year. So we expect the rideshare recovery to continue. We expect the EV sales to rise. We expect the EV penetration drive. So as you know, our business model is tied to -- the throughput on the network is tied to the number -- the amount of EVs being driven on the road. So with COVID recovery, we expect to continue at pace. Olga, did you want to add anything to that?

Right. Especially I would like to emphasize that our throughput are 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 are we or what's the status of the infra 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 that 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 end of the calendar year at the earliest.

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

One other additional point that I should make about federal stuff, which is -- so that's the $5 billion infrastructure money known as NEVI. There's the other part of it, which again, the formerly referred to as Build Back Better. This was the package of incentives that got stuck at the end of last year that Senator Manchin held up. Again, the latest is that there may be a deal to be struck on tax incentives with Senator Manchin coming on board, and that would include both 30C and 30D. So 30C is the tax break for building EV infrastructure, and 30D is the tax incentive for individual purchases of EVs. And again, our folks in D.C. are hearing that there is potentially a deal, the terms of which could conceivably be agreed to by Memorial Day. Now it wouldn't become law that quickly, but where everybody got kind of sad and depressed and thought that isn't going to happen, there is now a new cautious optimism, I would say, floating around policy circles that indeed this might go ahead. So that, again, that will accrue to EVgo's benefit. We haven't modeled it, but it'll accrue to EVgo's benefit.

That's interesting. Memorial Day is probably the time line 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?

So $7.7 million GAAP revenue, which we reported this quarter. So it includes regulatory credit sales of roughly $1.4 million. We don't give a specific guidance on how much of specifically regulatory credit sales. We expect to have this year. It's included in our overall guidance, which we have reiterated. But we are looking at a bit of a lower credit -- the price for credits right now, it's actually has been going up in the last few days, but it can't balance by us changing the methodology by which we recognize the credit, as I described earlier. So net-net, we're looking at a similar number for the full year as we were looking at a few months ago.

[Operator Instructions] 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 2% sequential drop, despite AFDC data suggesting 10%-plus increase in stalls. How much do you guys kind of 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, do you want to -- you and I have been talking about the unpacking of it. Do you want to take that?

Sure. So just a reminder that the number of stalls is not as strong of a driver of throughput for everybody, not just us. The key inputs into how much people are charging is how many cars is there and how much they are driving. Those are absolutely key. So that I think explains why you see the increase in number of stalls, including on our network. You see a flattish or slight decrease in the overall throughput. So the reason for it is seasonality. January and February are the lowest months in terms of vehicle miles traveled in the United States, where it increases by the time it's summer. Then another thing is omicron. The December and January, both months were actually affected by omicron surge. And you could look at better data for it, and some are looking at an OpenTable, for example, and how much restaurants' bookings have plummeted in December and January. And we saw that really representative metric for the demographics which uses our network. And we saw that January, it's in the normal year would be slower than other months, but here, it was accentuated by omicron surge where a lot of people were sick and they were not driving. And I think we published the graph in our presentation which clearly shows the January and February -- February also has 28 days compared to January and compared to March. But if you adjust February for 31 days, you already will see a recovery by the end of February. And then you clearly see how much we recovered in March, and that's associated with easing -- kind of a temporary easiness. We will observe COVID as it goes on, but March was -- I think COVID in March was slightly suppressed and people went back on the roads. And also seasonality played a role where by the time it's spring, people just drive more. And another reason is fleet volatility. Some of our dedicated contracts -- just a reminder, we have take-or-pay contracts with autonomous vehicle partners where it doesn't matter how much they use, they pay us some form of a floor. And those guys, they are still in the testing mode. And they ramp their usage up and they ramp their usage down, and they don't have a consistent usage pattern just yet. They also ship their cars around, just as a function of where the R&D development cycle. And we just saw a little bit of a decrease on their front throughout January and February as well, which is now recovering. But that's really -- we don't have much insight into their testing partners. It obviously doesn't affect our revenue, but it affects our throughput as well, and that complemented the omicron and seasonality on the retail side.

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 1Q 2021?

Olga.

Yes. So maybe just to take a step back, when you add a stall 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.

Sure. That is a good question. We are simultaneously dealing with the seasonality and also the rate at which EVs are being added to the network. So those -- and sometimes in those particular months where there a lot of EVs being added on the network, it could mask your seasonality and vice versa. So it's not enough for some reason because they're not even month-to-month. Sometimes when EVs, the number of EVs which got added to the network wasn't as high, but the seasonality would show the high amount, you'll get an average month. Those 2 play in together. And we -- frankly, we have some ideas about how EVs are going to be added to our network, but obviously that was a forecast, which are outside of our control. So I would be cautioned on making statements that Q2 and Q3 will be very high and then Q4 will go down. They might not be the case. I'm looking at very different scenarios. But in general, we could definitely expect that summer is very strong because of the driving patterns, and you would see some elevation. How Q4 would play out, the time will show. It's a little bit difficult to say right now.

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. Yes. So we talked a bit about what EVgo eXtend is, but for the other listeners -- in the last call. For the other listeners, EVgo eXtend is a kind of a branding of a service that we provide where EVgo goes and can identify some sites that are great, construct, operate and operate chargers, but the assets are actually owned by the site hosts, if you will. And what -- there's a giant opportunity. As you know, what EVgo does is we only build sites where they pencil the double-digit returns, and part of that is a function of utilization, et cetera, et cetera. With the Biden infrastructure money focused on rural areas in particular and corridors which don't necessarily have great utilization in the near term, but there are a number of site hosts who want to participate in the electric vehicle charging infrastructure, we can grow phenomenon. They might be interested in owning the assets where we actually don't want to take the risk on utilization, but we want to be able to add those stations to our geographic footprint and earn some revenue from them. So what we are -- we launched EVgo eXtend, which is that business model. So those site hosts will have EVgo-operated chargers on their locations, and then we will collect money to do the EPC and to keep those on our network over time. So it's a great revenue accretive stream. We are, as I alluded to in the last call, we are in advanced conversations with a number of really interesting partners. And we will -- when those deals are inked, we look forward to sharing them with you. But it's a very, very exciting way for EVgo to extend its reach, to grow our revenues at a sort of a very sort of without exposing ourselves to any sort of utilization risk in places where we are not confident that the utilization will necessarily be the way the business model will work the best. So stay tuned on this. We'll come at you as soon as we can with the specifics.

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?

Sure. So the vast majority of the 30,000 -- 35,000, I would say -- are retail customers. We don't disclose the exact split between OEM and kind of normal retail, but retail is still an overweight. On fleet, with rideshare customers, the number will be very small, but they bring a lot of traffic, so they have an outsized effect. But I would think about it as about majority retail for now. And the second question, so if you could repeat it because I had a hard time to process the question. Could you repeat 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.

Okay. And I also have a question on seasonality. Not so much I guess for the retail or network throughput, but I think you mentioned that you're going to see an outsized portion of LCFS credits coming in the first half of the year. But what is -- does it -- just trying to get a feel for how we should model that for the full year. Maybe more importantly, longer term, I assume we should assume some compression. But any sort of color you can provide on I'd say the other non-charging related portions of your seasonality?

Yes. So it's kind of actually even easier to model that business line now, because we used to recognize the LCFS revenue, regulatory credit sales revenue, 2 quarters after those credits or kilowatt hours were generated. We now have an offtake agreement with a third party provider where they get -- or where we record revenue 1 month after it's been generated. So when you can disregard 1 month, just call it immediately. So that depends on how much kilowatt hour was generated in California, and it's usually, it's around 65% to 75%. It fluctuates, but it's around that. And then the amount of revenue we record will be stick with proportion to those California kilowatt hours. In Q1 and Q2, we're kind of using both methods where we recognize those California kilowatt hours as they come in, and we sell the balance, which we had from past quarters that creates a bit of an elevated number in Q1 and Q2. But then Q3, Q4, it's actually pretty easy. California kilowatt hours, which is a certain percentage of total, and that corresponds into how many credits -- how much revenue we book in a proportionate way.

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. So I think what you have to do is you kind of have to go all the way up the funnel. So we've got a really large engineering and construction -- or active E&C pipeline, as we call it, which then feeds into what's going to get mobilized and then energized by the utility. So it is large. I think what this is starting to say, and you've heard me talk about this before, Oliver, is the flywheel spinning. That when we first came out as a public company, the data we gave is it takes 18 months on average from idea of having a station at a location to energization, with my Cathy Zoi aspirations with getting it down to 6 months, and we are not at 6 months yet. But we are starting to see the processes pick up in many jurisdictions. And so we've got that confidence that with our banner month in March, and again, that's everybody pulling together and the entire -- it takes a village to build a charger. The utilities are coming together, the local government authorities, the site hosts are super excited. We have a lot of confidence that, that is going to continue to ramp so that we can actually reach our year-end target. And we feel confident that we're on track to do that because of the pipeline, because of the speed with which things are picking up in every stage of that process. It still takes us 4 to 8 weeks to do the construction, but the bits on either side of contract signing with -- between site host and utility for easiness, utility energization timetables, all of those sorts of things. So that is actually the good news side.

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 time line 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.

Do you have mean charge rate? Do you mean charge rate?

Yes, the charge rate.

Got it. Right. So we do see the charges growing slowly but steadily. So every single month, it goes up. And I was just this morning looking at the analysis showing that if you look at the charge rate of people who joined in the last 5 months versus everybody else, they are quite a bit -- 15% higher on charge rate than everybody before. And then also when you look at the charge rate on our higher power 350 chargers, which is mostly what we are deploying right now, the charge rate is nearly double, a little bit less than double versus on 50-kilowatt chargers. So we absolutely see the rise of the charge rate, and we expect that to go up with new models being introduced to the market and just dominate in circulation. So that absolutely goes as planned.

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?

No, no. It's -- we do have a dedicated team. We have a dedicated fleet BD team, and many of them are in Long Beach right now at ACT conference where everybody who does anything on fleets is on an annual basis. And so the sales cycle, it's a great question. The sales cycle tends to be a bit longer for a couple reasons. One is that the fleets themselves have not been able to access EVs. So they've been kind of -- they had until kind of maybe 6 to 9 months ago had been kind of sitting on the sideline saying, well, I'm not going to worry about infrastructure until I get my vehicles. They now have had the aha realization that they need to be planning these things concurrently. What most of them are doing is they're doing either small pilots or they're doing RFP. So EVgo has been very, very busy over the past few months responding to RFPs, and that process is a multi-month sort of process to get responses. So we've got lots and lots of lots of irons in the fire, and as soon as something happens, we'll be excited to tell you about it. But I can tell you that the reception that we are receiving from a combination of our EVgo Optima software when we demo it for fleets, and when those fleet providers come and visit our innovation lab and also window, which is kind of near LAX, as I said, really, really, really well received. Our expertise at operating a public network where our financial success is predicated on making sure that it's up and running is standing us in good stead with fleet providers as they consider who they want to partner with on their own fleet operations and electrifying.

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. So we EVgo helped -- we used our experience in liaising with the federal government before it issued those guidelines that came out in March. So we felt most the general guidelines that were issued by the federal government -- again, they're guidelines. They're not rules, per se. They're guidelines to give to the states was pretty well informed. What we're now doing is we're liaising with the states as they develop their more detailed program design. And again, our team, our market development and public policy team is feeling pretty confident that most of the states are looking at what happens in the real world and what will bode well for success of electrifying transportation. So we're fingers crossed that these program designs that are going to come from the states are going to be pretty grounded in what's going to be successful. So that's the good news. On the timing, again, we talked a little bit about this earlier in the call. We don't expect that the money will shake loose until at the end of this calendar year at the earliest. And so we haven't modeled it, but again, I think before that time anyway. So we're -- what you see in our guidance is not predicated on accessing that federal money to the extent there are enlisting grant programs at the state and with utilities that we know about that we have access to that are included in what our plans are for this year. But the federal government money when it closes is upside.

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.