Onto, the UK-based electric vehicle subscription service, has closed a $60 million Series C round to help secure its position as the UK’s leading car subscription service and begin its expansion into Europe.
The round was led by Legal & General, with participation from existing investors, including Alfvén & Didrikson, Accelerated Digital Ventures, Cerebrum Tech Limited, and the family office of Jim O’Neill. The latest round brings the total raised to date to over $300 million in equity and debt.
Onto’s CEO and co-founder, Rob Jolly shares with TFN about the journey so far and the road ahead.
Success, despite challenging times
Onto was founded in 2017, when electric vehicles were starting to breakthrough as a viable replacement for traditional combustion engine vehicles. At the time, however, electric vehicles remained something of a niche interest; their cost and lack of charging points limited the market they could serve. But just as charging points become more commonplace, the Covid-19 pandemic played its part, “travel was extremely limited, and actually banned for months at a time,” said Jolly. But even as the world has emerged from the pandemic, there were still challenges.
“The UK is, unfortunately, experiencing a cost-of-living crisis,” notes Jolly, and while rising costs dampen demand, there are also supply side problems, “the whole industry faces ongoing challenges due to global supply chain issues and semiconductor shortages.”
Despite this, Onto has achieved significant growth, especially after the end of the pandemic, as people increasingly left their homes and were able to travel further afield. Over the past year, the service has seen a 500% growth.
An enticing offer
Much of Onto’s growth is down to their offer, which gives people the opportunity to test out an electric vehicle, says Jolly. “Subscriptions start at £489 for the 2022 Renault Zoe S,” he explains. And the all-inclusive model — the subscription includes 750 miles a month, insurance, and free charging at over 12,500 charge points — makes it an easy way to drive an electric vehicle, “the one-month flexibility helps consumers move across to electric without being locked into a long-term contract.”
Legal & General’s Fintech managing director, Wian Pieterse, also praised the attractiveness of Onto’s model. “Onto is an ambitious company with a talented management team that will play a vital role in accelerating the transition to electric vehicles,” he said. “We expect to see increasing demand for subscription models that not only pave the way towards a sustainable way of living, but also meet the needs of those who don’t want to tie up valuable savings or incur a loan to buy a car.”
The model arguably hits a sweet spot, helping people manage costs and move towards a more sustainable way to drive. Rapidly increasing fuel and energy costs have been a key feature of the UK’s cost-of-living crisis, and the climate crisis has been highlighted with record temperatures in the UK. “With the current cost of petrol and electricity, the total cost of ownership benefit on an EV subscription is becoming even more apparent,” Jolly told us.
Taking electric vehicle subscriptions to Germany
Having established Onto as the leading vehicle subscription service in the UK, they are now planning to expand into Europe. Their first new territory will be Germany, where they have already opened their office and appointed industry veteran, Joerg Feldheim as MD ahead of a launch in 2023.
Germany faces many of the same challenges as the UK: rising energy costs are an international phenomenon, and the climate crisis is high on the agenda across Europe. Onto hopes that its model will be just as appealing to German drivers and businesses as it has been in the UK.
Onto, however, are focused on delivering a service that does not just help consumers, but is a good business too. “Having a route to profitability and positive cash flows is more important than ever,” says Jolly. It’s that focus that has led to Onto’s success so far, despite a seemingly endless challenges over recent years.
And it’s a service that taps into market demand. A recent EY Consumer Index study suggested that nearly half of car buyers wanted to buy an electric vehicle for their next car. Onto remove all the hassle of moving to an electric vehicle, making it easy to test out, even if just for a month. They plan to use that ease to capture the subscription market in Europe’s biggest car-producing country.
Onto’s own data suggests that 90% of customers prefer the all-inclusive model they offer. And while some might have hesitated in the past, wondering if electric is quite right for them, Jolly hopes their model will help people finally join the electric vehicle revolution with Onto, “our transparent pricing and flexible service make it simple for consumers who are considering the switch to electric to take the plunge.”