Octopus borrows £550m to speed up electric car leasing

OCTOPUS ENERGY’S electric car leasing arm is to double the size of its fleet to 30,000 vehicles after securing a £550m debt deal.

The division, which has about 14,000 cars, leases new and used vehicles through employer schemes.

Its expansion will be seen as a vote of confidence in EVS when some big fleet buyers are curbing their plans to go electric. It also comes as sales to individuals slow with the up-front cost of the cars still too steep for many households.

Instead, a growing number of drivers lease EVS using salary sacrifice schemes. These result in tax savings running into hundreds of pounds per month.

About 4,000 workplaces including Dyson, Mclaren and Innocent Drinks have partnered with Octopus EV to offer these schemes.

Further growth of the company fleet is being financed by a £550m credit line secured from Lloyds Bank in December.

Fiona Howarth, chief executive of Octopus EV, said: “Demand for EV leasing continues to grow and the finance sector is ready to back the transition.

“We have more than tripled our fleet in the past year, and the growth continues as we see record numbers of drivers switching to clean, green driving.”

Octopus EV has grown from having 600 cars in 2021, to 6,000 as recently as last April and 14,000 today. It reported revenues of £37m in the year to April 2023, up from just £5m in 2022.

To offer lower-cost vehicle options to drivers, the company also expanded its fleet to include used EVS in December.

Ms Howarth said she expected the fleet’s mix to move from being less than 5pc used cars now to as much as 50pc.

The overall market share of EVS in the UK, versus petrol and diesel cars, slipped from 16.6pc to 16.5pc last year, according to the Society of Motor Manufacturers and Traders (SMMT).

Fleet operators such as Octopus remain by far the biggest buyers of EVS. In 2023, about 315,000 electric cars were registered but 77pc were bought by fleet owners or other businesses.

By comparison, the number of EVS purchased by private consumers fell from 89,000 in 2022 to 72,000 in 2023.

The SMMT is calling for greater incentives to pep up the market, including VAT relief for drivers who buy an EV.

Grants for individuals were scrapped in 2022, and an exemption from road tax will end in 2025, whereas relatively generous incentives remain in place for companies.

These include a 100pc capital allowance for EV purchases and tax relief on company cars that are electric.