Econ 416A9

Three important concepts

  • To reduce climate change, the Swedish government plans to achieve greenhouse gas neutrality as well as introducing an efficient transport system that involves the use of electric buses to cut on the fuel emissions and noise pollution caused by the existing public transport system that uses diesel. The total cost of ownership of adopting an electric transport system is relatively lower and efficient compared to the use of diesel and other fossil fuels.
  • The estimated cost values for the electric bus is attributed to a variety of factors identified by a sensitivity analysis of the total cost of ownership. TCO varies between different electric buses depending on the charger type and the number of extra batteries and is relatively lower compared to hybrid buses. The cost is higher for coaches with a large number of fast chargers due to the relative value of acquiring these chargers. Hybrid buses have a high total cost of ownership generated by energy cost of fossil fuel.
  • The line distance per year and the operational year are the most significant factors contributing to the total cost of ownership as indicated by the spider plot. Reducing the investment cost by 5% also plays a vital role in reducing the total cost of ownership. Other factors include the carbon tax per year, maintenance cost as well as the cost of energy.

What is a spider diagram?

A spider diagram is a presentation of all the increments for all the inputs selected on the x-axis and presents the resulting output in the form of line graphs (Bodmer). For the most experienced in the life cycle, the total cost of ownership was used to calculate such costs. Data is organized reasonably with the help of this plot, and It displays information about many variables.

The main economic story

Allocation of scarce resources is the basis of economics. The article suggests that concerning cost-effectiveness, a bus with relatively lower present worth of the total cost of ownership is preferable for use in an area where a charged electric bus is available as back up. For instance, a coach with one extra battery and two standard chargers is most suited compared to one with one spare battery and two fast chargers as the standard chargers are inexpensive and allow for longer battery life.

The spider plot does not provide room for comparing the input variables with the output. The most influencing input variables in the scheme should cover the most considerable vertical distance as outlined in the plot. The carbon tax input does not give any significant influence on the total cost of ownership hence can as well be removed from the scheme.

The minimum and maximum deviations from the baseline are given as follows

%deviation from baseline = (value/baseline-1)*100. For instance

Baseline hospital care

Minimum; (4.8/23-1)*100= -79.13%

Maximum; (48.4/23-1)*100=110%

Cost Savings From
(Millions of $ CAD)
Scenario Deviation from baseline
Worst Case Baseline Best Case minimum maximum
Hospital Care 4.8 23 48.4 -79.13% 110%
Physician Care 9 67.4 89.9 -86.65% 33.38%
Pharmaceuticals 16.3 65.3 163.3 -75.04% 150.08%
Avoided Death 0.4 1.1 3.6 -63.64% 227.27%
Avoided Illness 1.1 5.2 10.3 -78.85% 98.08%




Bodmer, Edward. “Generating Tornado Diagrams, Spider Charts, and Waterfall Graphs.” Wiley Online Library (2014).

Eschenbach, Ted G. “Spider Plots Versus Tornado Diagrams for Sensitivity Analysis.” Decision and Risk Analysis (1992): 40-46.