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Medium Merger & Acquisition

Quick Package Co

#Transportation
ProHub Comment

This case requires a structured cost-benefit analysis comparing two vehicle types over their lifecycle. The key insight is the breakeven analysis: with a $10,000 annual cost advantage, electric vans initially lose because their 3-year useful life is shorter than the payback period. However, a technology breakthrough extending vehicle life to 4 years flips the recommendation, demonstrating how changing one parameter can alter the investment decision.

Estimated Time 26 minutes
Difficulty Medium
Source Cornell
10 / 100
Our client is a major delivery company in the United States. Quick Package Co. (QPC) is a national player with reach across the nation. QPC completes routine residential and commercial package delivery (like FedEx and UPS). Competing is a costly business these days and the company is facing a major decision about their vehicle fleet – should the company invest in a fleet of internal combustion engine (ICE “gas”) trucks or electric (EV) vans? Our client is looking for your guidance to help answer this question.

Clarifying Information

  1. Urban and local deliveries [not long-haul trucking]
  2. QPC recently invested in EV Trucks (for interstate logistics)
  3. Assume the physical size and capacity of the two kinds of vans are equivalent
Mock Interview
Interviewer

Our client is a major delivery company in the United States. Quick Package Co. (QPC) is a national player with reach across the nation. QPC completes routine residential and commercial package delivery (like FedEx and UPS). Competing is a costly business these days and the company is facing a major decision about their vehicle fleet – should the company invest in a fleet of internal combustion engine (ICE "gas") trucks or electric (EV) vans? Our client is looking for your guidance to help answer this question.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
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Practice this case with AI Mock Interview

Quick Package Co must choose between gas or electric vans for urban delivery routes. Through detailed cost analysis (fuel, maintenance, labor, acquisition), the case reveals that electric vans cost $26,000/year versus $36,000/year for gas vans. Initially, gas wins due to the electric van’s 3-year lifespan, but improved battery technology extending electric van life to 4 years makes electric the better investment.

Key Insights:

  1. Lifecycle cost analysis is critical for capital investments: comparing total cost of ownership (acquisition + operating costs + vehicle lifespan) rather than just upfront or annual costs
  2. Breakeven analysis reveals that an electric van needs 4 years to recover its $40,000 cost premium; initial recommendation depends on realistic vehicle lifespan assumptions
  3. Technology changes can dramatically shift investment decisions: battery improvement from 3 to 4 years extended the electric option’s breakeven to within its useful life
  4. Operating synergies matter: QPC’s existing EV truck investment creates infrastructure synergies for EV vans (centralized charging), supporting the final recommendation
  5. Risk mitigation is essential: charging downtime risk is manageable through operational planning (overnight charging, scheduled charging during non-delivery hours)