Onto, one of the UK’s largest electric car subscription providers, has entered administration following the loss of key financial backer Legal & General (L&G).
The company offered flexible leases on EVs, charging zero upfront deposit and rolling extras such as insurance tax into one monthly subscription fee.
It held a stock of 7000 vehicles – including the Fiat 500, Tesla Model 3 and Volkswagen ID 3 – and had 20,000 customers.
Onto was hit by the falling residual values of electric cars in recent months, CEO Rob Jolly said in July. According to a Sky News report, L&G declined to offer further funding to Onto that month, having committed £22.5 million in May and June. It also led a $60m (£50m) funding round for Onto in late 2022.
Gavin Maher, joint administrator, said in a statement that Onto had also been hit by rising interest rates and a fall in disposable income, which made it harder to raise further funding.
He also confirmed that the firm will continue to serve existing customers as administrators “explore strategic options”.
Chris Kirby, co-founder and CEO of car subscription software provider Tomorrow’s Journey, said that Onto’s collapse is “not evidence that the business model doesn’t work” but highlighted the vulnerability of start-ups in current market conditions.
Kirby added: “Many start-ups are having to cut overheads. If you add in the RV [residual value] challenges and increased interest costs, it has the potential to have a devastating impact on cash reserves. That looks to be the case with Onto.
“If you're managing ‘cash burn’ or working to a ‘funding runway’ and your costs unexpectedly increase overnight, then this cash management can be decimated. Unlike large corporate businesses, companies like Onto have limited room to manoeuvre without external funding, which is very difficult to obtain in the market today, especially at short notice.”
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