Vose SoftwareModelChoice decision tree · Transport
Fleet Electrification
Convert a 100-vehicle diesel fleet to electric all at once, in phases, in part, or not at all?
From the model’s decision tree
Best first decision: Hybrid Fleet (30% EV)
The expected value of each first option when every later decision is also made well (the tree rolled back).
| First decision | Expected value | |
|---|---|---|
| Full EV Conversion | $957,812 | |
| Phased Conversion (50%) | $735,000 | |
| Hybrid Fleet (30% EV) | $1,069,688 | ✔ best |
| Keep Diesel Fleet | $365,625 |
| Measure | Value |
|---|---|
| Expected value of the best strategy | $1,069,688 |
| Best outcome on the best strategy | $1,297,500 |
| Worst outcome on the best strategy | $791,250 |
S-curve (cumulative probability) of Hybrid Fleet (30% EV) from the saved simulation.
The decision
A logistics company operates a fleet of 100 diesel vehicles and must decide whether to transition to electric vehicles. With rising fuel costs, tightening emissions regulations, and improving EV technology, the company faces a critical strategic decision about its fleet composition. Options include:
- Full EV conversion — replace entire fleet with electric vehicles
- Phased conversion — convert 50% first, then decide on the rest
- Hybrid fleet — convert 30% to EV, keep 70% diesel
- Keep diesel — maintain current fleet with minimal investment
How the inputs are linked
The tree sheet has a parameter table above the decision tree. Vehicle costs, operating costs, and fleet size are defined once in the control panel and referenced by multiple branches in the tree. Changing a single parameter instantly updates all linked tree values and recalculates expected values.
The inputs that drive several branches at once:
- Fleet Size — scales purchase costs and operating savings in all paths
- EV Vehicle Cost — drives acquisition cost for full, phased, and hybrid
- Fuel/Electricity Cost per Mile — operating savings in every terminal value
- Annual Miles — multiplied across all operating cost calculations
- Government Incentive — reduces net purchase cost in all EV paths
The decision tree
The tree has 2 decisions, 4 chance events and 11 outcomes. The best path is open: at every decision the best choice is marked, and the expected value beside each branch counts every cash flow from the start. Open any other branch to see what follows it.
DecisionChance event+$ cash flow on the branch
Full EV Conversion −$4,750,000expected $957,812
Chance: Fuel Price Trend (Full EV)- 45% Fuel Prices Rise +$6,106,250payoff $1,356,250
- 35% Fuel Prices Stable +$5,575,000payoff $825,000
- 20% Fuel Prices Drop +$5,043,750payoff $293,750
Phased Conversion (50%) −$2,375,000expected $735,000
Chance: Phase 1 EV Performance60% EVs Perform Wellexpected $1,162,500
Decision: Phase 2 Decision- Convert Remaining 50% +$3,200,000payoff $825,000
- Stay Mixed Fleet +$3,537,500payoff $1,162,500 ✔ best
- 40% EVs Underperform +$2,468,750payoff $93,750
Hybrid Fleet (30% EV) −$1,425,000expected $1,069,688 ✔ best
Chance: Hybrid Fleet Outcome- 55% Good Operational Fit +$2,722,500payoff $1,297,500
- 45% Poor Operational Fit +$2,216,250payoff $791,250
Keep Diesel Fleet −$400,000expected $365,625
Chance: Diesel Fleet Outlook- 40% Status Quo +$1,187,500payoff $787,500
- 35% Regulation Pressure +$875,000payoff $475,000
- 25% Fuel Crisis −$62,500payoff −$462,500
Change the numbers. Open the workbook with ModelChoice, change a probability or a cost in the tree, and the best decision updates at once.
Key assumptions
| Assumption | Value | Notes |
|---|---|---|
| EV Vehicle Cost | $55,000 | Purchase cost per electric vehicle |
| Diesel Vehicle Cost | $40,000 | Purchase cost per diesel vehicle |
| Fuel Cost per Mile | $0 | Diesel fuel cost per mile driven |
| Electricity Cost per Mile | $0 | Electricity cost per mile for EV |
| Fleet Size | 100 | Total number of vehicles in fleet |
| Annual Miles per Vehicle | 25,000 | Average annual miles per vehicle |
| Maintenance Savings per EV | $2,500 | Annual maintenance savings per EV vs diesel |
| Government Incentive per Vehicle | $7,500 | Tax credit / rebate per EV purchase |
| EV Resale Value (5 yr) | $22,000 | Expected resale value per EV at year 5 |
| Diesel Resale Value (5 yr) | $15,000 | Expected resale value per diesel at year 5 |
| Analysis Period | 5 | Time horizon for NPV calculation |
| Fuel Price Increase Rate | 5.0% | Annual fuel price escalation rate |
The figures are illustrative: the companies and numbers are invented for teaching.
Try it in ModelChoice
- Increase Fuel Cost per Mile. Watch EV options become more attractive
- Reduce Government Incentive. See how subsidies affect the decision
- Change Fleet Size. Observe how scale affects all strategies
- Run Sensitivity Analysis. Tornado chart shows which parameters matter most
Find similar models
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Further reading
Download the workbook and open it with ModelChoice. The free trial opens every example.
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An illustrative example: the figures are invented for teaching. Last updated 9 October 2026.