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Difficulty: MediumResolving Paradoxes and Discrepancies

In 2024, a financial services company replaced its entire fleet of gasoline-powered corporate vehicles with high-efficiency electric vehicles, expecting to lower its annual vehicle energy expenditures. Over the subsequent twelve months, the electricity cost per mile driven for the electric vehicles was 40 percent lower than the gasoline cost per mile driven for the former fleet, and the total annual mileage driven by employees remained constant. Nevertheless, the company's total annual expenditure on vehicle fuel and charging increased significantly over that period.

Which of the following, if true, most helps to resolve the apparent discrepancy described above?

  1. Unlike gasoline stations, which charged only for fuel, public fast-charging stations used by the fleet levied heavy hourly parking fees and peak-demand surcharges during every charging session.Answer
  2. B
    Average gasoline prices in the metropolitan area where the fleet operates fell by 15 percent over the course of the twelve-month period.
  3. C
    The company qualified for federal clean-energy tax rebates that offset a portion of the initial purchase price of the new electric fleet.
  4. D
    Routine maintenance and battery inspection costs for electric vehicles are expected to increase as the vehicle fleet ages over the next five years.
  5. E
    Many employees reported that driving the electric vehicles was more convenient than driving the former gasoline-powered vehicles.

Answer

The apparent discrepancy is resolved by the option stating that public fast-charging stations used by the fleet levied heavy hourly parking fees and peak-demand surcharges during every charging session.
The correct answer accounts for both premises simultaneously. While the raw electricity consumed per mile was 40% cheaper than gasoline, the total cost of using charging stations included substantial ancillary charges (hourly parking and peak-demand surcharges) that were not present at gasoline stations. These extra fees raised the total charging expenditure above the previous gasoline spending even though total mileage remained identical.

Step-by-Step Solution

1
Identify the two contradictory facts in the stimulus.
Fact 1: The per-mile electricity cost of the new electric fleet was 40% lower than the per-mile gasoline cost of the old fleet, and total miles driven stayed constant.
Fact 2: Total annual expenditure on fleet fuel and charging increased significantly.
Resolving a paradox requires understanding why lower per-mile energy costs and constant distance traveled did not yield overall spending reductions.
2
Evaluate the answer choices to find a factor that explains how total charging costs could rise despite lower per-mile electricity rates.
The correct explanation introduces additional fees—such as hourly parking fees and demand surcharges per charging session—that are incurred during charging but are not captured in the per-mile electricity cost rate.
This additional fee structure reconciles both premises: per-mile energy consumption cost was lower, but total spending on charging sessions was higher due to auxiliary fees.

Key Concept

Resolving Paradoxes: Confounding Cost Factors and Total vs. Unit Cost Discrepancies
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Topics

Resolving Paradoxes and Discrepancies

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