A wide range of service providers depend on vans to keep their businesses running. That includes those carrying cargo, equipment, or passengers. If your business uses vans for your daily operations, switching to electric vans (EVs) could save you thousands of dollars.
In the last few years, several companies have started making and selling electric vans, and while they usually cost more upfront than a gasoline or diesel van, they generally have lower fuel and maintenance costs. This means electric vans can cost less than traditional internal combustion engine (ICE) vans overall. Plus, incentive funding is available to bring down the upfront cost significantly (as well as operating costs in some states, like California, Oregon, and Washington).
If you’d like to run your own cost comparison, Flipturn has launched Flipturn Assess, a free online tool where you can evaluate cost of ownership for over 200 light, medium, and heavy duty models.
Breaking it Down: What Costs Go Into the Equation?
Gas Electric Capital Costs Vehicle Purchase Costs (Vehicle Price + Taxes) - Charging Infrastructure Costs (if using private chargers) Operating Costs Fuel Vehicle Maintenance - Charger Maintenance Incentive Funding - Varies by location; funding is available for both upfront and ongoing costs
The lower fuel and maintenance costs for EVs make it possible for a fleet to make up the additional upfront cost of these vehicles within their service lifetimes. How fast your business makes up the difference depends on a few things, primarily how much you drive.
Let’s Look at an Example
Let’s say you operate a gasoline-powered cargo van that is nearing the end of its life, and you are deciding whether to replace it with another gasoline van or an electric one. We have to make some assumptions about your day-to-day operations, so let’s assume:
- You are a local home service provider (e.g., solar installer, general contractor, HVAC technician, etc.);
- You operate in Los Angeles, CA;
- You drive 75 miles per day on average;
- You can charge an EV at your office or shop overnight for 8 hours; and,
- You drive your vans for about 8 years before replacing them.
The figures below show estimates for the TCO of operating a gas van versus an EV under these conditions, reported in today’s (2023) dollars.
Electric Vs Gasoline Cargo Van - Total Cost of Ownership (Payback Period)
Electric Vs Gasoline Cargo Van - Total Cost of Ownership (Detailed)
In this example the electric van would cost about $17,500 more upfront than the gasoline van due to a higher purchase price and the cost of a charger, in the absence of EV incentives. However, this example does include a $7,500 vehicle purchase incentive from the California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), dropping the vehicle price difference to $10,000 (see the US Department of Energy’s Laws and Incentives Database for more information on incentives). Despite the higher upfront cost, the EV would have significantly lower operating costs.
All in all, this leads the EV to reach a break-even point with the gasoline van in about 3 years and to create an estimated lifetime savings of nearly $19,000.
What Electric Vans Are Available on the Market, Anyway?
There are at least 10 vehicle manufacturers making electric cargo vans in the US and Canada, including mature companies like Ford and General Motors (BrightDrop) and relatively younger companies like Envirotech and GreenPower Motor Company, according to the Zero Emission Technology Inventory. And, the number of manufacturers increases when considering other similar body styles like step vans and box trucks.
With a growing number of commercial electric vehicles available on the market, it can be difficult to know which one to choose or how to even start planning your transition to EVs. Flipturn can help - our team of electrification experts and software engineers have developed tools designed to support fleets streamline their electrification planning and operations. Get in touch with us to learn more through our website or by emailing hello@getflipturn.com.
Our Assumptions
The analysis above represents a single scenario; results may vary depending on several factors such as chosen vehicle features, the location of vehicle operations, daily mileage, charger selection, etc. For this scenario, we made the following assumptions:
Purchase Price
Gas Van: $44,000. Electric Van: $57,000
Sources: https://www.ford.com/commercial-trucks/transit-cargo-van/models/transit-van/ ; https://www.ford.com/commercial-trucks/e-transit/pricing-and-incentives/
Sales Tax
9.50% (City of Los Angeles, CA)
Sources: https://www.cdtfa.ca.gov/taxes-and-fees/rates.aspx
Charger Hardware and Installation
Hardware: $800. Installation: $2,500
Sources: https://chargers.ford.com/products/ford-connected-charge-station; https://www.sciencedirect.com/science/article/pii/S2542435120302312
Gasoline Costs
$4.55/gallon in Year 1 of operation
Sources: https://gasprices.aaa.com/?state=CA (Los Angeles County, 01/26/2023)
Electricity Costs
$0.07082/kWh in Year 1 of operation plus other fees per Los Angeles Department of Water and Power’s Small Commercial and Multi-Family Time-of-Use Rate A-1B
Sources: https://www.ladwp.com
Maintenance Costs
Gas Van: $1,000/month in Year 1 of operation on average. Electric Van: $600/month in Year 1 on average. EV Charger: $400/year.
Sources: Argonne National Laboratory estimates scheduled EV maintenance to be 40% less costly than gasoline vehicle maintenance: https://publications.anl.gov/anlpubs/2021/05/167399.pdf; https://repairpal.com/cars/ford/transit-150/2015; https://afdc.energy.gov/fuels/electricity_infrastructure_maintenance_and_operation.html
Fuel Economy
Gas Van: 17 miles/gallon. Electric Van: 0.56 kWh/mile (67 kWh of battery capacity / 120 miles of range)
Sources: https://www.caranddriver.com/ford/transit; https://www.caranddriver.com/ford/e-transit
Incentives
$7,500 in vehicle purchase incentives are assumed for the electric van. We derive $7,500 in incentives based on California HVIP’s 2022-2023 Funding Tables and by assuming the gross vehicle weight rating of the Ford E-Transit, which is 9,500 lbs, making it a Class 2b vehicle.
Sources: https://www.ford.com/commercial-trucks/e-transit/models/cargo-van/; https://californiahvip.org/funding/
Future Fuel and Maintenance Costs
Gasoline, electricity, and maintenance costs naturally change over time, so we incorporated the following assumptions.
Compound Annual Growth Rate for Gasoline: 3.41%
Compound Annual Growth Rate for Electricity: 2.20%
Compound Annual Growth Rate for Vehicle Maintenance: 3.07%
Discount Rate: A 5% discount rate is applied to estimate the net present value of future costs.
Sources: CAGR for Gasoline: US Energy Information Administration (EIA) Annual Energy Outlook (AEO) 2022, Table 12: Petroleum and Other Liquids Prices (Reference Case), Nominal $/gallon, 2023 - 2031, https://www.eia.gov/outlooks/aeo/data/browser/. CAGR for Electricity: US EIA AEO 2022, Table 3: Energy Prices by Sector and Source, Nominal $/MMBTU, 2023 - 2031, https://www.eia.gov/outlooks/aeo/data/browser/. CAGR for Vehicle Maintenance: Federal Reserve Bank of St. Louis, Consumer Price Index for All Urban Consumers: Motor Vehicle Maintenance and Repair in U.S. City Average, Compounded Annual Rate of Change, Seasonally Adjusted, 2000 - 2022. https://fred.stlouisfed.org/series/CUSR0000SETD#0.
