As disclosed in Note 2, the Company adopted ASC 842, which governs the accounting for the Company’s leases, effective January 1, 2022.

As a lessee, the Company enters into agreements with various Site Hosts, which allow the Company to lease space to operate the charging stations on their property, and with various parties to lease its office and laboratory space. The Company, at the inception of the contract, determines whether a contract is or contains a lease. For leases with an initial contractual term in excess of 12 months, the Company records the related operating or finance right-of-use asset and lease liability. Some leases also include renewal and/or early termination options, which can be exercised under specific conditions. Renewal and termination options are not included in the measurement of the right-of-use assets and lease liabilities unless the Company is reasonably certain to exercise the options.

The Company’s lease agreements primarily require lease payments based on a minimum annual rental amount, a percentage of annual sales volume, periodic adjustments related to inflation or a combination of such lease payments. The Company has elected the practical expedient to not separate non-lease components from lease components in the measurement of liabilities for all asset classes. Lease liabilities are recognized at the present value of the fixed lease payments using an implicit rate and, if not available, an incremental borrowing rate based on estimated collateralized borrowings available to the Company. The Company incurs initial direct costs and landlord incentives that increase or decrease the calculated right-of-use asset, respectively. The Company recognizes lease expense for operating leases on a straight-line basis over the lease term. The Company considers variable lease payments generally as revenue sharing and expenses them as incurred. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As a lessor, the Company has entered into agreements to lease charging equipment, charging stations and other technical installations or sublease properties leased from Site Hosts to third parties. The Company, at the inception of a lease contract, determines if it is an operating, sales-type or direct financing lease. The leases provide for fixed monthly payments and sometimes include provisions for contingent variable rent based on number of charging sessions and minutes used, which are recognized when earned. Fixed payments received under lease agreements for operating leases are recognized on a straight-line basis over the lease term and are reported in revenue in the condensed consolidated statements of operations.

The Company has entered into agreements with Site Hosts, which allow the Company to operate the charging stations on the Site Hosts’ property. Additionally, the Company leases offices and laboratory space under agreements with third-party landlords. The agreements with the Site Hosts and landlords are deemed to be operating leases and contain terms ranging from one to 10 years. Certain leases contain renewal options that can extend the term from one to seven years. The Company has not entered into any finance leases.

In addition to the amounts disclosed above, the Company has estimated additional operating lease commitments of $34.7 million for leases where the Company has not yet taken possession of the underlying asset as of March 31, 2022. As such, the related operating lease right-of-use assets and operating lease liabilities have not been recognized in the Company’s condensed consolidated balance sheet as of March 31, 2022.

For the three months ended March 31, 2022, the Company’s lease costs consisted of the following:

¹Rental expense for all property and equipment operating leases was $0.5 million for the three months ended March 31, 2021.

As of March 31, 2022, the maturities of operating lease liabilities for the years ending December 31, are as follows:


(in thousands)
2022	$	3,068
2023		4,605
2024		4,080
2025		3,109
2026		2,686
2027		2,403
Thereafter		8,274
Total undiscounted operating lease payments		28,225
Less: imputed interest		(5,600)
Total discounted operating lease liabilities	$	22,625

The following table shows future minimum payments under noncancellable operating leases with initial terms of greater than one year, based on the expected due dates of the various installments as of December 31, 2021, as previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, prior to the adoption of ASC 842:


(in thousands)
2022	$	3,486
2023		3,515
2024		2,987
2025		2,093
2026		1,767
Thereafter		5,570
	$	19,418

Other supplemental information, as of March 31, 2022, consisted of the following:


	March 31,
(dollars in thousands)	2022
Weighted-average remaining lease term	7.6 years
Weighted-average discount rate		5.71	%

Other supplemental cash flow information, for the three months ended March 31, 2022, consisted of the following:


	Three
	Months Ended
	March 31,
(in thousands)	2022
Cash paid for amounts included in measurement of operating lease liabilities	$	910
Right-of-use assets obtained in exchange for new operating lease liabilities	$	5,008

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 three years with renewal options.

Since the leasing arrangements the Company enters into with lessees are operating leases, the underlying asset is carried at its carrying value as owned and operated systems within property, equipment and software, net, on the condensed consolidated balance sheets and is depreciated to estimated residual value over its expected useful life.

For the three months ended March 31, 2022, the Company’s lease income consisted of the following components:


	Three
	Months Ended
	March 31,
(in thousands)	2022
Operating lease income:
Fixed lease income	$	261
Variable lease income		170
Total lease income¹	$	431

¹Lease income was $0.4 million for the three months ended March 31, 2021.

As of March 31, 2022, future minimum rental payments due to the Company as lessor under operating leases (including subleases) for the fiscal years ending December 31, are as follows:


(in thousands)
2022	$	677
2023		480
2024		480
2025		480
2026		240
	$	2,357

The components of charging equipment and charging stations leased to third parties under operating leases and which are included within the Company’s property, equipment and software, net, are as follows:


	March 31,
(in thousands)	2022
Charging station equipment and construction costs	$	4,065
Less: accumulated depreciation		(775)
	$	3,290