How Octopus EV grew from start-up to one of the UK’s biggest sal/sac providers

Octopus Electric Vehicles is shaking up the established order. In just four years, it has mushroomed from a disruptive leasing start-up to become the UK’s second biggest salary sacrifice provider, with a fleet of 27,000 cars plus another 3,500 in the order bank.

Within the next 12 months or so, it plans to double its funded fleet size to around 60,000 cars, potentially leapfrogging Tusker to become the country’s largest sal/sac leasing company. In just five years.

The majority of its fleet is sal/sac with around 6,000 customers, predominantly SMEs but also some mid-to-large corporates. It also has 500 business contract hire and personal contract hire vehicles. The latter is viewed as a growth opportunity, leaning on the relationships formed by its energy parent company.

So how did it get here? How did Octopus Electric Vehicles achieve such its unprecedented growth trajectory?

From disrupter to global business

Octopus has previous as a disrupter. In 2016, it was a tiny British energy supplier looking to upset the market; now it is a global conglomerate working across four continents with four main divisions: Energy Generation for renewables, Energy Services, Electric Vehicles and the Electroverse for Business public charging solution.

“Our mission is to help people get into an electric vehicle,” Oliver Boots, Octopus Electric Vehicles (EV) commercial director, told Fleet News. “And the best way to do that is through salary sacrifice.”

Boots joined the company in 2021, just as it secured funding to scale its salary sacrifice business after bringing in-house a white label product.

“One of the reasons why we didn't carry on white labelling with incumbent providers is because they couldn't deliver the service we wanted,” Boots said. “We're very proud of our 4.8 TrustPilot (score) and we work really hard to maintain that.”

He added: “What’s common across the group is a real focus on customer experience and customer service.”

This focus, together with investment in technology, laid the groundwork for Octopus EV’s rise to prominence. It has made the SME market more accessible for sal/sac and also enabled Octopus EV to set up and implement schemes at considerable pace.

“In the early days, (Octopus founder and CEO) Greg (Jackson) said ‘can you scale this whilst also delivering the service?’,” said Boots.
“The answer is yes: it's a combo of great tech and great people – the two have to come together.

“Some of the large providers have got a lot of legacy tech. So it's not worth them setting up an SME scheme because it takes so long. But because we've built greenfield tech, we can set up a scheme in a week. Our tech enables us to scale at speed.”

First-time sal/sac schemes

Octopus also takes a different approach to many contemporaries by focusing its efforts on organisations which do not operate a company car scheme. That’s perhaps not surprising; it doesn’t have the low hanging fruit offered by a funding book full of contract hire customers to pursue.

“Our primary market is where the company doesn’t have a car scheme,” said Boots. “Generally we are stronger in first time sal/sac where we talk to the HR team.

“But we do enjoy the challenge when there is an incumbent. There's a few on the go at the moment where they are looking at separating out the sal/sac from the traditional company car and running it separately.”

Octopus EV believes it has another clear advantage over rival leasing companies: being part of the energy group means it can offer “an EV ecosystem”, said Boots.

This includes a free home charger, which it fits – it can also install a smart meter at the same time, if required, as well as solar panels and heat pumps on sal/sac - and the Octopus Go cheap electric tariff, which includes a 1p discount on the standard overnight tariff (Boots estimates ‘fuel costs’ will be roughly 2p per mile).

The company also incentivises people to switch to Octopus Energy with a credit offer equivalent to about 4,000 miles of driving.

For people without off-road parking, it has the Octopus Electroverse app and RFID card which gives access to thousands of public charge points in the UK and Europe (90% coverage in the UK and 970,000 points across Europe). It also comes with 4,000 miles of free driving.

Billing happens after each charging session, although Octopus Energy customers can link their Electroverse and energy accounts and pay for charging with their energy bill.

“We become the net Zero transition partner for employees,” Boots added.

Between 75% and 80% of people take the home charger, but the proportion is falling as more people become comfortable taking an electric car without the ability to charge at home.

“We use the team as case studies. Most of them don't have a driveway and when they're talking to customers, they can tell their own their own personal story,” Boots said. “They find the local solution, such as lamppost charging – it works.”

Onboarding new customers

A key part of the salary sacrifice proposition is supporting customers in the promotion of the scheme to employees.

Octopus calls it “activation”, which includes a raft of tools for employers to utilise including an online portal packed with advice and plenty of marketing materials. It also does a launch webinar and regular roadshows, giving employees the opportunity to get behind the wheel of an electric car.

“Most importantly, we have a team of 75 EV experts, so the employee gets a one-to-one relationship to ask all sorts of questions,” Boots said. “Some will have multiple calls over multiple months. Others do everything completely online; they don’t talk to us at all.”
The activation period can last a couple of years, with new campaigns and engagement activities resulting in demand spikes. They include ‘Opto-versaries’, celebrating key moments when staff joined the sal/sac scheme.

Cars are written on two-, three- or four-year contracts, with average replacement cycles currently 41 months. Some cars are on extension to off-set the slump in residual values, something Octopus, like its contemporaries, is not immune to.

Indeed, as an electric-only funder, Octopus is particularly exposed to price fluctuations in the used market.

Second life leasing

Its solution mirrors the actions taken by others: second life leasing. Around 15% of sal/sac orders are for nearly new (sub-24-month) cars, most of which are early terminations.

“There's a there's a huge appetite for it,” said Boots. “A lot of our early terminations go back out on a second life on sal/sac and some of our full-time returns, but that's still a small volume for us at the moment.

“Our aspiration is to get a second life out of them rather than put them into the traditional auction markets.”

Used car leasing and sal/sac have historically had limited appeal with drivers, most likely because the BIK they pay is based on the new car P11D. However, with the low rates on electric vehicles, their objections are subsiding, particularly if given access to a more premium or better equipped model.

Boots added: “As long as the value for them is strong, I think people are OK with that.”

In adition to offering solar panels and heat pumps on sal/sac to support uptake of its eletcirc vehicles, Octopus is running a couple of pilots looking at salary sacrificing some of the energy as well as part of the lease.

“We're always restless, always want to increase the sal/sac proposition,” Boots said.

An FN50 debut in 2025?

Octopus could potentially make its debut in the Fleet News FN50 this year after declining to participate for the past couple of years. Its reticence was due to its speed of growth being tied to a fixed number published in November.

“I think that (today) we would be pushing the (FN50) top 15 and hopefully we'll be in the top 10 in the next five months,” Boots said.

With the company signing up an astonishing 30 to 40 companies per week, this ambition seems well within reach.

“We don't set a rigid growth plan, but we'd love to be doubling in the next year – that would be a great aspiration for us,” Boots said.

“There's a lot more we can do in B2B and direct B2C across new and used cars. And we're slightly ambivalent of the financial product that sits underneath it.

“What we want to do is make it simple and easy for people to make the switch out of an ICE car into an EV – that’s our mission.”