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Electric vehicle leasing group Onto collapses after L&G pulls plug

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Electric car subscription company Onto has entered administration just over a year after securing nearly £150m in funding.

Onto said in an announcement on Monday that it had appointed administrators from Teneo Financial Advisory to oversee the administration of Onto Holdings, along with its four additional subsidiaries.

Administrators cited rising interest rates and a “squeeze” on disposable income as reasons why Onto failed to secure additional shareholder funds.

Based in Warwickshire, Onto at one time was one of the UK’s largest EV firms. It acquired a fleet of electric cars, which customers could pay a monthly subscription to use.

The cost of the subscription included the vehicle itself, the insurance and charging.

The firm secured £100m in debt financing in January from investment group CDPQ and asset manager Pollen Street with the goal of expanding its collection of cars to lease out.

Speaking last month, Rob Jolly, Onto’s chief executive, described the company as “the pre-eminent market leader in electric car subscriptions, and the board is confident that our proposition can continue to play a key role in the UK’s net zero transition”.

L&G also led a $60m funding round for Onto a year ago, saying at the time it was “an ambitious company with a talented management team that will play a vital role in accelerating the transition to electric vehicles”.

The credit facility followed a $60m (£48.1m) Series C round for Onto from the financial services group Legal & General, among others.

In July, it was reported that L&G would provide no additional funding for Onto, though the firm did not comment at the time as to why.

Gavin Maher, senior director at Teneo and Onto joint administrator, said in a statement: “Onto has suffered from the steep fall in electric vehicle residual value in the first half of 2023, rising interest rates and the squeeze on disposable income and was unable to secure additional funding from its shareholders.

“After entering administration, Onto will continue to serve existing customers as the administrators explore strategic options.”

The company’s collapse highlights the perilous challenge for many early-stage businesses as they seek sufficient funding to steer them towards break-even in a more austere financing environment.

Other investors cited in Onto’s Series C funding announcement included Accelerated Digital Ventures, Cerebrum Tech Limited, and the family office of Lord O’Neill, the former Treasury minister.

In total, Onto has raised more than $350m to fund its growth.

Potential bidders for its assets are expected to be contacted in the coming days.

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