The U.S. Department of Energy is providing $1.25 billion in loan guarantees to EVgo (EVGO.US).
1min read EVgo (EVGO.US), the US electric vehicle charging network operator, soared more than 13% before the US market opened on Friday after the company said it had received $1.25 billion in loan support from the US Department of Energy to support the deployment of about 7,500 high-power, ultra-fast electric vehicle charging stations across the United States. The loan also highlights the urgent need for both electric vehicles and the charging station network that supports them to support the US government's "carbon reduction" ambitions.
EVgo said in a statement that the expansion would increase the total number of high-power fast charging stations owned and operated by the company to at least 10,000, more than tripling the coverage of its electric vehicle charging network by 2029.
The supportive loan was provided under the Department of Energy's Section 17 Clean Energy Finance Program, and was issued after receiving a conditional commitment on October 3.
"This public-private partnership will help us continue to scale our charging business to meet the significant number of electric vehicle options that US consumers will have in the coming years," EVgo CEO Badar Khan said in a statement.
The loan is crucial for EVgo, which has been struggling since the Federal Reserve's interest rate hike cycle began in 2022, with its stock price falling from a peak of $24 in 2021 to about $6.2 currently, and even hitting a low of $1.60 this year. The $1.25 billion loan is even much higher than EVgo's market value, which was about $6.68 as of Thursday's close.
The EVgo's stock price plunge and its business struggles stem from the significant cooling of global EV demand since the second half of 2022, amid the prolonged high interest rate environment from central banks including the Federal Reserve, and the gradual exit of government subsidies related to EVs, which further weakened EV demand, leading to EVgo's long-term sluggish performance. The $1.25 billion loan is like a lifeline for EVgo.
