Interviewer view · keep this screen to yourself
Electric or diesel vans for a UK parcel company
You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.
Case timer
00:00
1. Read the prompt aloud
Read it slowly, then pause. Let the candidate ask questions before they structure.
A UK parcel company must replace 100 delivery vans this year. Should it buy electric vans instead of diesel ones?
Format note: Candidate-led: you set up the comparison, ask for costs, and choose the measures; the interviewer answers and then tests your answer with a change.
2. Answers to clarifying questions
Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.
If asked: Are we comparing a new electric van with a new diesel van, or with keeping the old vans?
Answer: With a new diesel van; the old vans must be replaced this year anyway.
If asked: What cost of capital should I use?
Answer: 8 percent a year.
If asked: How long do the vans last?
Answer: About six years for both types, with little value at the end.
3. The hypothesis a strong candidate states
Listen for an early, testable guess like this one. It does not need to match word for word.
Electric vans cost more to buy but less to run. My hypothesis is that the running-cost saving pays back the extra price within the van's life, and that the answer is most sensitive to the price of electricity.
4. A model structure
Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.
- Extra upfront cost versus running-cost savings, in today's money
- Extra upfront cost per van, including charging
- Yearly saving per van: fuel and maintenance
- Key: Payback and NPV at 8 percent
- Sensitivity: electricity price
5. The working, step by step
Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.
Step 1: Extra upfront cost
What a strong candidate does: Candidate: "What do the two vans cost?" Interviewer: "Electric GBP 45,000, diesel GBP 30,000, plus about GBP 3,000 per van for depot chargers."
Extra upfront cost per electric van (GBP): 45,000 - 30,000 + 3,000 = 18,000
Step 2: Yearly saving
What a strong candidate does: Candidate: "And running costs?" Interviewer: "Diesel costs about GBP 6,000 a year per van, electricity about GBP 2,000, and electric vans save about GBP 1,000 a year in maintenance."
Yearly saving per van (GBP): (6,000 - 2,000) + 1,000 = 5,000
Step 3: Payback
What a strong candidate does: The extra cost divided by the yearly saving: inside the six-year life, but not by much.
Payback (years): 18,000 ÷ 5,000 = 3.6
Step 4: Savings in today's money
What a strong candidate does: Discount six years of GBP 5,000 at 8 percent (1.1664 is 1.08 x 1.08, and so on). Six years of savings are worth about 4.62 years of savings today.
Present value of savings per van (GBP): 5,000 ÷ 1.08 + 5,000 ÷ 1.1664 + 5,000 ÷ 1.259712 + 5,000 ÷ 1.360489 + 5,000 ÷ 1.469328 + 5,000 ÷ 1.586874 = 23,114
Step 5: NPV per van and for the fleet
What a strong candidate does: Present value of savings minus the extra upfront cost, then times 100 vans.
Fleet NPV (GBP): 100 × (5,000 × 4.62288 - 18,000) = 511,440
Step 6: Test: electricity price rises by half
What a strong candidate does: Interviewer: "What if electricity prices rise 50 percent?" Candidate: "Electricity would cost GBP 3,000 a van, so the yearly saving falls to GBP 4,000, and the NPV per van almost disappears."
NPV per van if electricity rises 50 percent (GBP): 4,000 × 4.62288 - 18,000 = 492
The recommendation to listen for
At the end, say: "The CEO walks in. What is your recommendation?"
Buy electric vans, but in phases and with electricity costs fixed where possible. First, each electric van costs GBP 18,000 more including charging but saves about GBP 5,000 a year, a payback of 3.6 years within a six-year life. Second, at an 8 percent cost of capital each van adds about GBP 5,100 of value in today's money, about GBP 511,000 for the fleet. Third, the answer depends on electricity prices: if they rise by half, the value per van almost disappears, so agree a fixed-price electricity contract for the depot before committing the whole fleet. Start with the 40 vans on the shortest urban routes, where range is not a concern.
Risks a strong answer names: Electricity prices may rise more than expected; Battery life may be shorter than six years on long routes; Depot power supply may need an upgrade that costs more than GBP 3,000 a van.
Next steps: Get quotes for a fixed-price electricity contract; Ask the local power network whether the depot can take 100 chargers; Run 10 electric vans for three months and measure real running costs.
Strong versus weak
A strong answer
Compared the right alternative (a new diesel van, not the old one), computed payback and NPV, and tested the one assumption that could flip the answer.
A weak answer
Added six years of undiscounted savings, GBP 30,000 against GBP 18,000, and called it a clear win without discounting or testing electricity prices.
Score the candidate
Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.
This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?
Total
0 out of 25
Score all five criteria to see the band and the feedback template.