Lease Accounting

6 Months Ended

Jun. 30, 2024

Note 4 – Lease Accounting

Lessee Accounting

The Company has entered into agreements with Site Hosts, which allow the Company to operate charging stations on the Site Hosts’ property. Additionally, the Company leases offices, a warehouse and laboratory space under agreements with third-party landlords. The agreements with the Site Hosts and landlords are deemed to be operating leases. Original lease terms generally range from one to 15 years and certain leases contain renewal options that can extend the term for up to an additional five years. The Company has not entered into any finance leases.

The Company has estimated operating lease commitments of $40.0 million for leases where the Company has not yet taken possession of the underlying asset as of June 30, 2024. As such, the related operating lease ROU assets and operating lease liabilities have not been recognized in the Company’s condensed consolidated balance sheet as of June 30, 2024.

The Company’s lease costs consisted of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2024		2023		2024		2023
Operating lease costs
Charging network cost of sales	$	2,721	$	1,472	$	5,150	$	2,791
General and administrative expenses		1,099		1,221		2,173		2,440
Variable lease costs
Charging network cost of sales		667		778		1,113		817
General and administrative expenses		42		21		66		57
Short-term lease costs		—		26		—		59
	$	4,529	$	3,518	$	8,502	$	6,164

As of June 30, 2024, the maturities of operating lease liabilities for the periods ending December 31, were as follows:


(in thousands)
2024	$	6,494
2025		13,817
2026		13,278
2027		12,745
2028		12,490
Thereafter		61,033
Total undiscounted operating lease payments		119,857
Less: imputed interest		(40,134)
Total discounted operating lease liabilities	$	79,723

Other supplemental and cash flow information consisted of the following:


	Six Months Ended
	June 30,
(dollars in thousands)	2024			2023
Weighted-average remaining lease term (in years)		8.9			8.8
Weighted-average discount rate		9.4	%		9.3	%
Cash paid for amounts included in measurement of operating lease liabilities	$	3,800		$	2,246
ROU assets obtained in exchange for new operating lease liabilities	$	12,656		$	4,107

Lessor Accounting

The Company leases charging equipment, charging stations and other technical installations and subleases properties leased from Site Hosts to third parties under operating leases where EVgo is the lessor. Initial lease terms are generally one to ten years and may contain renewal options.

Because the leasing arrangements the Company enters into with lessees are operating leases, the underlying asset is carried at its carrying value as property, equipment and software, net, or included in operating lease ROU assets on the condensed consolidated balance sheets.

The Company’s operating lease income consisted of the following components:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2024		2023		2024		2023
Operating lease income:
Charging, commercial revenue	$	746	$	534	$	1,309	$	992
Sublease income:
Ancillary revenue		213		267		480		534
	$	959	$	801	$	1,789	$	1,526

As of June 30, 2024, future minimum rental payments due to the Company as lessor under operating leases (including subleases) for the periods ending December 31, were as follows:


(in thousands)
2024	$	821
2025		1,326
2026		910
2027		667
2028		334
	$	4,058

The components of charging equipment, charging stations, land, and subleased host sites leased to third parties under operating leases, which are included within the Company’s property, equipment and software, net, and operating lease ROU assets were as follows as of:


	June 30,		December 31,
(in thousands)	2024		2023
Charging station equipment and construction costs	$	5,493	$	5,941
Less: accumulated depreciation		(1,495)		(1,307)
Property, equipment and software, net	$	3,998	$	4,634

Operating lease ROU assets	$	11,016	$	11,764