The error  message I get is "Variable required - can't assign to this
expression".

I.e. a variable  is not "not acceptable", a variable is required.

What version of Excel are you using? (I'm using 2003.)

What your statement  is trying to do is to replace  3 characters  in the
result of Range("E2"). Or more specifically Range("E2").Value. This is
a local value which is created to contain the value of the cell - it's
not the cell itself.

To do what you want to do, I imagine you will need to create a local
variable, put the contents of the cell into it, change the local
variable's contents with Mid, then put them back into the cell.