7:49 am, July 7, 2023
Electric car subscription service Onto is facing possible administration after Legal & General said it wouldn’t be giving it rescue cash.
Onto was given the crushing news by the financial services group this week, according to Sky News. It’s believed that L&G ploughed £22.5m into the company over the past couple of months, following a $60m (circa £47m) funding round 12 months ago.
At the time, L&G was reported as saying Onto was ‘an ambitious company with a talented management team that will play a vital role in accelerating the transition to electric vehicles’.
But it’s now believed L&G’s decision has led to restructuring firm AlixPartners making contingency plans for a potential administration.
It’s unclear how much more money Onto needs, but according to Sky News it’s believed to be ‘substantial’. Onto is said to have ‘sizeable debt facilities’ with various lenders.
Car Dealer has been told that Onto is now exploring various investment options.
It’s believed Onto has been hit by the falling prices of EVs, as its borrowings are secured against its fleet.
Onto offers subscribers cars from a number of manufacturers, such as Audi, Tesla, Fiat, Renault, Peugeot, DS, Citroen, Hyundai and Vauxhall.
It doesn’t tie customers to three-year contracts but instead lets them decide each month if they want to continue with their vehicle, swap it or stop.
L&G hasn’t commented on the matter but Onto CEO and co-founder Rob Jolly said: ‘Legal & General continues to be a supportive shareholder with Onto. However, it isn’t planning to invest further at this time.
‘We are therefore exploring a number of options regarding further investment while we continue on our path to profitability.
‘It has been a challenging period for the electric vehicle industry given the recent drop in residual values. However, we believe that Onto’s proposition is well placed as electric car demand continues to grow.’
Article originally published at 7.48am on July 7 and updated at 9.21am the same day with Onto’s comment
