Electric vs Diesel Van: A Cost Comparison for Delivery Service

This paper compares the annual equivalent cost of electric and diesel vans for a delivery service, considering factors such as fuel consumption, maintenance cost, and resale value. It also discusses the sensitivity of the cost model to changes in main cost drivers and identifies additional non-financial factors. Based on the analysis, the paper recommends the use of electric vans for cost efficiency and sustainability.

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Transportation problem
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Table of Contents
Introduction.................................................................................................................................................2
Identification of Strength and weakness associated with the two fuel choices of Flying Buffet..................2
The annual equivalent cost for each vehicle type........................................................................................4
Sensitiveness of the annual equivalent cost model to changes in the main cost drivers...............................4
Identification of Additional/non-financial factors........................................................................................5
Recommendation.........................................................................................................................................6
Conclusion...................................................................................................................................................6
References...................................................................................................................................................7
Appendices..................................................................................................................................................9

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Introduction
The paper will reflect upon an understanding of two fuel choices that is electric and
diesel that is considered by the company to provide an efficient delivery service to its customers.
It provides strengths and weaknesses that are based on two fuel choices that are being
determined by the company. It will also present the annual equivalent cost of each type of
vehicle that is electric and diesel van. The paper will determine the sensitiveness of annual
equivalent cost model that will change the main cost drivers. Therefore, the paper will also help
in identifying non-financial and additional factors based on two fuel choices.
Identification of Strength and weakness associated with the two fuel choices of Flying
Buffet
Strength Weakness
Diesel delivery van
 Its
purchase price is
reasonable.
 It does
not have spark plugs.
 It
replaced every five
years to make sure
that the food hygiene
and quality standards
demanded by the
industry and its
purchasers are
strengthened by
modern and clean
vehicles (Borén,
Nurhadi, Ny, Robèrt,
Broman & Trygg,
 Its
battery expected to
last ten years and after
that no use.
 It only
suitable for short
distance usage and
carry light goods.
 The
battery pack hangs
and deliberately low
(Quak, Nesterova &
van Rooijen, 2016).

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2017).
LDV Electric van
 Its
battery storage
enables the use of
regenerative braking
to top up the batteries
when the brakes are
applied.
 It is the
only commercially
available zero
emission vehicle
(ZEV).
 It takes
an hour to recharge
the battery using its
50KW charging point
fully.
 It has
an easy clean nonslip
cargo floor (Orsi,
Muratori, Rocco,
Colombo & Rizzoni,
2016).
 It does
not have many dealers
so the possibilities of
getting the van,
especially in an
emergency should be
taken into account.
The annual equivalent cost for each vehicle type
The annual equivalent cost of each vehicle type that is diesel delivery van and equivalent
electric van differs from one another in various factors.
Annual equivalent cost for diesel delivery van

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Diesel delivery van gives the annual mileage of around 25,000 miles. The diesel price of
diesel van comprise of £0.96 liter, and its fuel consumption is near about 23.5 miles per gallon.
The maintenance cost of diesel van consists of £2,436 per annum and the vehicle excise duty
(road tax), is £235 (Barfod, Kaplan, Frenzel & Klauenberg, 2016). The London congestion
charge of this particular vehicle is £10.50, and its purchase price is £23.138. After five years the
resale value of diesel value is £3,000. The range of diesel van consists of 350 miles that is near
about 560 km. Also, it could carry a payload of about 1746 kg.
Annual equivalent cost for the electric van
Electric van also gives the annual mileage of around 25,000 miles which is same as diesel
van. An electric vehicle does not consume fuel as it does not run on electric. Hence, the electric
consumption of electric van is estimated at 5.6p per mile. The maintenance cost of electric van
consists of £1,200 whereas, it does not comprise of vehicle excise duty (road tax) and London
Congestion charge (per day). The purchasing price of an electric vehicle without batteries consist
of £35,800 to £60,000. Also, the plugin grant of such vehicles ranges up to £8,000 max, and after
five years the resale value of this vehicle is £6,000 (Li, 2016). The battery life of electric vehicles
lasts up to 10 years and its battery lease per month is estimated at £520. The range of electric van
consists of 124 miles that is near about 198 km. The full recharge time of such vehicles only
takes 1 hour hence its recharge time is very fast. The vehicle could carry a payload of about 1419
kg. The disposal costs of this vehicle are unknown, whereas the insurance and the driver costs
are excluded and the same which is considered to be the vehicle operating costs (Nüesch et al.,
2014).
Sensitiveness of the annual equivalent cost model to changes in the main cost drivers
The exact rate of the EV80 is around £60,000 approximately four times
higher than the rate of the diesel. Change in the maintenance of both the fuel per annum,
flying buffet delivery van per annum cost is £2,436, and the electric van's per annum
maintenance is £1,200 (Wüst et al., 2015). Due to efficiency in higher energy rate electric
vehicles plays a significant role in reducing the emission of greenhouse gas and energy.
The financial factors for both vehicles differ in various aspects. However, the equivalent
cost of a current electric vehicle is comparatively higher than diesel and petrol vehicles
(Diez-Ibarbia et al., 2017). Based on sensitivity analysis there possess vast difference in

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the maintenance cost of both the vehicles used by the company. It is observed that both
the vehicles provide equal mileage per hour in equal working days, but their other
operating cost varies with each other. There would be a difference in the resale value of
both the vehicles. Therefore, it is determined that such types of vehicles have lower
running costs that enhance their effect to a great extent. The increase in the cost of battery
would put an impact on the revenue of the organization. It is noticed that government
financial subsidy is lowering the price of battery that would be beneficial for the
company to make efficient use of electric vehicles. This makes electric vehicle more cost-
efficient than diesel vehicles that lead to leasing contract (Bousse et al., 2018). Thus, the
company makes use of government financial subsidy for buying electric vehicles at low
cost.
Impact on the recommendation
The change in the main cost drivers of electric and diesel vehicles would put an impact
on recommendation as it will discuss the efficient use of electric vehicles. It is observed that the
cost of electric vehicles is higher than the cost of a diesel vehicle that makes organizations think
twice before buying such vehicles. It demonstrates the sensitivity of equivalent cost drivers to the
changing cost drivers that will provide with an understanding of the cost of each type of vehicles
(Zhao, Stobart, Dong & Winward, 2015). It also stated that with the use of government subsidy
the cost of electric vehicles could be decreased that will enhance the owner of the Flying Buffet
to purchase electric vehicles at low cost.
Identification of Additional/non-financial factors
The additional or non-financial factors are to be considered based on electric and diesel
vehicles are electric vehicles makes use of a rechargeable battery which could be recharged by
simply connecting to an electricity supply. The battery storage makes efficient use of
regenerative braking when the brakes are applied. After five years the delivery diesel vans are
replaced to make sure that the quality standards and exceptional food hygiene that is demanded
by the organization and its customers to provide them with modern and clean vehicles (Lajunen,
& Lipman, 2016). The principal advantages of the battery of electric vehicles as they are
considered to be the only zero emission vehicle which is commercially available to the people.
As compared to other large electric vans EV80 consist of single choice battery pack size. For

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starters, electric motors always deliver instant torque that will help in overcoming with the
issues.
Recommendation
It is strongly recommended to Flying Buffet to make use of electric van instead of diesel
van for providing high-quality service to the customers. As electric van runs on rechargeable
battery, it is free of using diesel. It will prove to be profitable for the company if used efficiently.
The electric van is quite easy and affordable to use due to its low cost and maintenance charge. It
is noiseless and does not produce carbon dioxide which is harmful to the people. It is considered
to be cheaper to buy as compared to diesel van. Such type of vans takes less time to reach a
particular destination to deliver food to the customers. Hence, it will be beneficial for the
company to make use of electric van that may reduce 20% rush charge. The overall cost of the
electric van is comparatively less than diesel van that would reduce the cost of expenditure. A
decrease in expenditure would increase the revenue growth of the company. Efficient use of
electric van would deliver food at a rapid speed that would satisfy 2000 customers of Flying
Buffet. Using electric van for the delivery purpose will increase the sustainability of the
company within the market. The battery of the vehicle would last for ten years, and if the battery
gets damaged, then it could be disposed of easily. Therefore, it is recommended to Flying Buffet
to make use of LDV EV80 electric van regarding orders and delivery operation as it would be
suitable for the company.
Conclusion
The paper demonstrated the effectiveness of using an electric van instead of diesel van
due to its low cost and convenient to use. It reviewed van fleet mix based on two fuel options
such as diesel and electric. It presents the strengths and weaknesses of diesel and an electric van
that is determined by the organization. It is observed that as compared to diesel van an electric
van is more convenient to use by the company for the delivery purpose. Therefore, the paper
helped in identifying as well as understanding the non-financial and additional factors that have
been taken into consideration by the company.

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References
Barfod, M. B., Kaplan, S., Frenzel, I., & Klauenberg, J., 2016. COPE-SMARTER–A decision
support system for analysing the challenges, opportunities and policy initiatives: A case study of
electric commercial vehicles market diffusion in Denmark. Research in Transportation
Economics, 55, pp.3-11.
Borén, S., Nurhadi, L., Ny, H., Robèrt, K. H., Broman, G., & Trygg, L., 2017. A strategic
approach to sustainable transport system development–part 2: the case of a vision for electric
vehicle systems in southeast Sweden. Journal of Cleaner Production, pp.140, 62-71.
Bousse, Y., Corazza, M. V., De Belen, M., Kowalski, J., Arriaga, D. S., & Sessing, G., 2018,
May. Electrification of Public Transport: Lessons from the ELIPTIC Project. In The 4th
Conference on Sustainable Urban Mobility (pp. 469-477). Springer, Cham.
Diez-Ibarbia, A., Battarra, M., Palenzuela, J., Cervantes, G., Walsh, S., De-la-Cruz, M., ... &
Gagliardini, L., 2017. Comparison between transfer path analysis methods on an electric
vehicle. Applied Acoustics, 118, pp.83-101.
Giordano, A., Fischbeck, P., & Matthews, H. S., 2018. Environmental and economic comparison
of diesel and battery electric delivery vans to inform city logistics fleet replacement
strategies. Transportation Research Part D: Transport and Environment, 64, pp.216-229.
Lajunen, A., & Lipman, T., 2016. Lifecycle cost assessment and carbon dioxide emissions of
diesel, natural gas, hybrid electric, fuel cell hybrid and electric transit buses. Energy, 106,
pp.329-342.
Li, J. Q., 2016. Battery-electric transit bus developments and operations: A review. International
Journal of Sustainable Transportation, 10(3), pp.157-169.
Nüesch, T., Cerofolini, A., Mancini, G., Cavina, N., Onder, C., & Guzzella, L., 2014. Equivalent
consumption minimization strategy for the control of real driving NOx emissions of a diesel
hybrid electric vehicle. Energies, 7(5), pp.3148-3178.

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Orsi, F., Muratori, M., Rocco, M., Colombo, E., & Rizzoni, G., 2016. A multi-dimensional well-
to-wheels analysis of passenger vehicles in different regions: Primary energy consumption, CO2
emissions, and economic cost. Applied Energy, 169, pp. 197-209.
Quak, H., Nesterova, N., & van Rooijen, T., 2016. Possibilities and barriers for using electric-
powered vehicles in city logistics practice. Transportation Research Procedia, pp.12, 157-169.
Wüst, M., Krüger, M., Naber, D., Cross, L., Greis, A., Lachenmaier, S., & Stotz, I., 2015.
Operating strategy for optimized CO2 and NOx emissions of diesel-engine mild-hybrid vehicles.
In 15. Internationales Stuttgarter Symposium (pp. 93-111). Springer Vieweg, Wiesbaden.
Zhao, D., Stobart, R., Dong, G., & Winward, E., 2015. Real-time energy management for diesel
heavy duty hybrid electric vehicles. IEEE Transactions on Control Systems Technology, 23(3),
pp. 829-841.

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Appendices
Figure: LDV EV80 electric large van
(Source: Giordano, Fischbeck & Matthews, 2018)