Economic-Financial Feasibility Analysis of the Development of an Electric-Based Heavy Vehicle in the Curitiba Region.

Arthur Gustavo Rufino; Ricardo De Souza

DOI: 10.22167/2675-6528-202602689

Article derived from a Course Conclusion Work (TCC), with content based on the student’s original work and adapted to the editorial format of the E&S Magazine with the support of the ResumeAI tool, an artificial intelligence solution developed by Instituto Pecege for textual synthesis and organization.

Summary

The growing demand for sustainable alternatives has driven the development of electric vehicles. The economic-financial feasibility of a project to develop an electric-based heavy vehicle in the Curitiba region was analyzed, considering a five-year horizon. The research was characterized as exploratory and quantitative, using real data to apply and demonstrate investment analysis methodologies. Net Present Value (NPV), Internal Rate of Return (IRR), and Payback were used to assess the project’s attractiveness. The results indicated that the project is financially viable, with an NPV of R$5.67 million, signaling the creation of economic value. The calculated IRR was 34.1%, exceeding the opportunity cost of 16.04%. The estimated Payback period was 3.5 years, demonstrating a quick recovery of invested capital. It was concluded that the project presents an attractive return potential and alignment with innovation and sustainability trends. Limitations involved the definition of projections based on the growth of the electric automotive industry and the mapping of project costs.

Keywords: Investment analysis; Electric bus; Payback; Internal Rate of Return; Net Present Value.

1. Introduction

In recent decades, industrial and population growth have generated significant impacts on the lives of the world’s population. This expansion demands the protection of the environment against high levels of pollutant gas emissions, driving the search for renewable energy sources and sustainable development.

In this scenario, research and projects related to electric vehicles have intensified as a viable alternative to vehicles using fossil fuels. Electric vehicles, unlike combustion models, do not emit pollutants during use, contributing directly to improved air quality and offering benefits in terms of energy efficiency, as well as positive impacts on sound, economic, and social issues.

The electric vehicle market shows optimism and continuous advancement in demand. Data from the International Energy Agency (IEA, 2025) indicate that, in 2024, more than seventeen million electric vehicles were sold globally, representing a share exceeding twenty percent of total sales. For 2025, the projection is that sales will reach twenty million units, raising the share to approximately twenty-five percent of the total vehicles marketed (IEA, 2025).

In the Brazilian context, NeoCharge (2025) points to BYD as the main electric vehicle manufacturer, followed by Toyota, GWM, and Volvo. This panorama reflects a growing competition between traditional automakers and new entrants. Factors such as regulatory changes, increased environmental awareness, and the evolution of battery technology have accelerated the adoption of electrified vehicles in the country.

To ensure the exponential growth of the sector and the implementation of large-scale projects by companies, aligning organizational objectives with market conditions, a feasibility study becomes essential. Such a study allows for the analysis of projects through different methodologies for investment decision-making, identifying financial viability and the best options for capital allocation (DUARTE JÚNIOR, 2013).

Among the investment evaluation criteria, the Net Present Value (NPV), which is based on the cost of money over time, the Internal Rate of Return (IRR), which seeks the interest rate that equates the investment to the discounted future cash flow, and the Payback, which determines the payback period for the initial investment, stand out. The latter is frequently used in conjunction with other metrics (PADOVEZE, 2016).

The need for investment decisions based on robust financial analyses, especially in an expanding market like that of heavy electric vehicles, justifies the relevance of this study. Thus, the objective of the present work was to perform the financial feasibility analysis of a heavy electric vehicle development project in the region of Curitiba – PR.

2. Material and Methods

The research was characterized as exploratory in its nature, using real data to apply and demonstrate financial feasibility analysis methodologies in projects. It sought to evaluate the potential of the analytical tools employed to support decision-making in business contexts, contributing to the understanding of the practical applicability of these methodologies in real investment situations. Regarding the approach, it was a quantitative research, based on financial calculations and indicators. In relation to the objectives, it was descriptive, aiming to describe and analyze the elements for feasibility assessment.

The study aimed to perform a financial feasibility analysis of a heavy electric vehicle development project in the Curitiba – PR region, with a five-year horizon. For this purpose, a project for the production of a 12-meter urban electric bus, Padrón model, with a capacity for about 80 passengers, intended for common urban routes, was characterized. The analysis considered the investment and operation of the project in the city of Curitiba.

The definition of the vehicle’s unit price was established based on market analyses and comparisons with equivalent diesel bus models. To anchor the price to the sector’s reality, market data and studies were consulted, such as those presented by Accio (2024), which indicate the price variation between diesel and electric vehicles. A base price was stipulated from these references for the project.

Sales and production volume projections were established considering data from the electric vehicle market and the establishment of growth scenarios. Sources such as Canal VE (2025) and SMABC (2023) were consulted to support the annual sales estimates. The commercialization area was defined as Curitiba and São Paulo, regions that demonstrate dynamism in the electric vehicle sector, according to data from Click Petróleo e Gás (2025) and Canal VE (2025).

Production costs were estimated based on technical studies of the sector, which indicate the proportion of production cost in relation to the selling price, considering the high cost of battery systems and electric powertrain (EPE, 2023; ICCT, 2020; BloombergNEF, 2022). The cost composition included R&D, materials and components, industrial fixed costs, and administrative costs, based on literature and market data (ANTP, 2023; BloombergNEF, 2022; CEPAL, 2021; McKinsey & Company, 2022).

The initial investment required for the project was determined through market analyses and budgets for special tools, equipment, and elevators. This amount was allocated to the installation of a new automated production line. The breakdown of initial investments considered the allocation of resources for automated workstations, robotic cells, industrial robots, sensors, cameras, software, digital integration, and infrastructure.

Based on investment data, unit price, sales volume, and expected expenses, the project’s cash flow was assembled for a five-year horizon. Variable costs and revenues proportional to sales volume were considered, in addition to annual fixed and administrative costs. The cash flow structure included the application of Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) totaling 34%, and the incorporation of inflation projections from the Central Bank of Brazil.

For the evaluation of financial viability, the methods of Net Present Value (NPV), Internal Rate of Return (IRR), and Payback were employed, complemented by the definition of the Minimum Attractiveness Rate (MAR). The NPV, according to Padoveze (2016), calculated the present value of future cash flows. The IRR, also according to Padoveze (2016), determined the interest rate that equates the initial investment to the discounted future flows. The Payback measured the payback period of the initial investment (Padoveze, 2016), while the MAR established the minimum required return for the project’s viability (Van Horne and Wachowicz Jr., 2009).

The discount rate, or cost of capital, was calculated based on corporate finance concepts (Souza, 2025), considering several components. These included the risk-free rate, the market risk premium, the country risk premium, inflation (US and Brazilian), and the size premium. The cost of third-party capital was considered null, given the project’s five-year duration, and the composition of the discount rate was detailed based on specific parameters and sources.

Additionally, a sensitivity test was performed to analyze the behavior of the NPV in the face of different variations in the cost of capital and the initial investment amount. This procedure allowed for an evaluation of the project’s robustness against distinct economic scenarios and variations in the contributed capital, providing a more comprehensive perspective on the investment’s attractiveness.

3. Results and Discussion

This section details the results obtained in the economic-financial feasibility analysis of the development project for an electric-based heavy vehicle, as per the established objective. Initially, the study employed the 5W2H tool to characterize the business, outlining its essential aspects and providing the basis for subsequent financial analyses. This approach allowed for a comprehensive understanding of the proposal, from its nature to the resources required for its implementation, aligning with the exploratory and quantitative methodology adopted to demonstrate the applicability of investment analysis tools.

The project consists of the production of a heavy electric bus, Padrón model, designed to transport approximately 80 passengers and meet the demands of common urban lines. The initiative arises from the growing market need for sustainable transportation solutions, driven by the search for means that minimize environmental impact. The exploration of this opportunity aims to attract potential investors, highlighting the project’s alignment with global trends in decarbonization and energy efficiency in the transportation sector, as discussed in the introduction on the advancement of electric vehicles.

The project execution would be carried out by a large automotive industry, located in the city of Curitiba, in the state of Paraná. The possibility of implementation is immediate, with the investment concentrated in the existing plant in Curitiba. The operationalization foresees the installation of a new automated production line, which will incorporate special tools, modern equipment, and elevators, optimizing the production processes. The detailing of the initial investment and subsequent cash flows constitutes the fundamental basis for the financial feasibility analysis, which will be presented in the following paragraphs.

The product pricing was a crucial step, considering a 12-meter urban electric bus, sold as a complete vehicle. To establish a realistic price, market analyses were conducted comparing the electric model with its diesel equivalent. It was observed that the price of an electric bus can be three to five times higher than that of a diesel model, according to Accio (2024). For the 12-meter Padrón model, the average price of a diesel bus is approximately R$800,000, while the electric one reaches about R$2.8 million, a value that was adopted as the basis for the project.

The definition of production volume was based on data from the electric vehicle market and scenario projections. In 2025, approximately 662 units were sold, representing an annual growth of 136%. The optimistic projection for 2030 indicates that the number of units sold could reach 18,350, which would imply a compound annual growth of 94% (Canal VE, 2025; SMABC, 2023). The study established three compound annual growth scenarios: pessimistic (18%), moderate (36%), and aggressive (94%), reflecting different market expansion expectations.

Considering these market projections, the project predicted a specific productive growth curve for the five-year horizon. In the first two years (2026-2027), production would be 20 units. In the third and fourth years (2028-2029), the volume would increase to 35 units. In the fifth year (2030), maximum capacity would be reached with 50 units produced and sold. These volumes represent approximately 3% of 2025 sales, and, in the moderate and aggressive scenarios for 2030, they correspond to 1.6% and 0.2% of total sales, respectively.

Sales of heavy electric vehicles would be concentrated in the regions of Curitiba and São Paulo, due to the billions of investments driving the sector in these cities. São Paulo, in particular, has led electric vehicle sales in Brazil since 2022. The choice of these regions is also justified by the logistical ease between them, allowing the company to concentrate its marketing and distribution efforts efficiently, as pointed out by Click Petróleo e Gás (2025) and Canal VE (2025).

Regarding expenses, technical studies indicate that the production cost of electric buses ranges from 70% to 85% of the selling price, mainly due to the high cost of battery systems, the electric powertrain, and vehicle integration (EPE, 2023; ICCT, 2020; BloombergNEF, 2022). Adopting a conservative criterion and considering the unit price of R$2.8 million, the total unit production cost was estimated at R$2.4 million, representing approximately 85.7% of the selling price, aligning with the literature.

The composition of the unit production cost was detailed into specific categories. Materials and components represent the largest share, at 70% of the total cost, equivalent to R$1,680,000 per unit. Industrial fixed costs correspond to 15%, or R$360,000 per unit. Research and development (R&D) expenses were estimated at 10%, totaling R$240,000 per unit, while administrative costs represent 5%, or R$120,000 per unit. This distribution reflects indications from various literature on cost structure in the sector (ANTP, 2023; BloombergNEF, 2022; CEPAL, 2021; EPE, 2023; ICCT, 2020; McKinsey & Company, 2022).

In parallel with operational inputs and outputs, the project requires a significant initial investment. Based on market analyses and budgets, investors have agreed to provide an amount of R$10 million for the installation of a new automated production line. This line was designed to optimize production and reduce the need for direct labor, representing a technological and strategic advancement for the company. The allocation of this capital is fundamental for the realization of the project and for achieving the projected production volumes.

The initial investment of R$10 million was itemized into various structures. Automated workstations and robotic cells require R$2 million. Industrial robots, sensors, and cameras, essential for automation, represent the largest investment, at R$5 million. Software and digital integration, crucial for the line’s operation, total R$2 million. Infrastructure, including power, compressed air, and networks, was budgeted at R$0.5 million, and other complementary costs amount to R$0.5 million. This distribution reflects the complexity and technological nature of the new production line.

For the project’s cash flow assembly, variable costs proportional to sales volume were considered, according to the production projection. Fixed and administrative costs were treated as recurring annually over the five years of the project. Additionally, a Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) totaling 34% was applied. The inflation used in the projections was based on the target expectations of the Central Bank of Brazil (2026), with rates of 4.04% for 2026, 3.80% for 2027, and 3.50% for the years 2028, 2029, and 2030.

The project’s consolidated cash flow, after considering all inflows and outflows, demonstrated an initial investment of R$10 million in period zero. In subsequent years, the net cash flows were positive: R$2.971 million in year 1, R$3.084 million in year 2, R$5.587 million in year 3, R$5.782 million in year 4, and R$8.549 million in year 5. These values reflect the total revenue generated from sales, minus fixed, variable, administrative, R&D costs, and taxes, resulting in net profit and, consequently, the available cash flow for the feasibility analysis.

For the calculation of the Net Present Value (NPV) and the Internal Rate of Return (IRR), the Minimum Attractiveness Rate (TMA) was determined, which represents the minimum return required by investors for the project to be considered viable (Van Horne and Wachowicz Jr., 2009). The TMA was composed of several parameters, based on Souza (2025), including a risk-free rate of 4.34% (T-Note CBO 10y), a country risk premium of 3.24% (EMBI+), and a market premium of 5.48% (S&P500 and T-Note market).

Other components of the MARR included a 1.04 unlevered beta, derived from the average of comparable companies in the electric vehicle sector, and the consideration of 0% debt and 100% equity, resulting in a 1.31 levered beta. The effective tax rate was 34%. Local inflation (3.58% from the Central Bank of Brazil, 2026) and US inflation (2.34% from CBO) were also incorporated. The Size Premium was considered 0.00% (Duff & Phelps). Based on these parameters, the Cost of Equity (nominal CAPM) was calculated at 16.04%, serving as the discount rate for project valuation.

With the project’s cash flows and discount rate defined, the financial feasibility indicators were calculated. The project’s Net Present Value (NPV) was R$5.67 million after the five-year analysis period. A positive NPV indicates that the project is financially attractive, as it generates economic value for the company, exceeding the cost of invested capital. This result demonstrates that the proposed investment is capable of remunerating investors’ capital and still generating a surplus, confirming the initiative’s attractiveness.

The Internal Rate of Return (IRR) calculated for the project was 34.1%. This value is significantly higher than the cost of capital of 16.04%, which represents the Minimum Attractiveness Rate required by investors. An IRR that exceeds the opportunity cost indicates that the project offers a robust and attractive return, reinforcing its financial viability. The superiority of the IRR in relation to the MAR is a strong indicator that the project is an excellent option for capital allocation, according to investment analysis principles (Padoveze, 2016).

The estimated Payback period for the project was 3.5 years. This indicator demonstrates the time required for the initial investment to be recovered by the generated cash flows. A 3.5-year Payback is considered relatively fast, which contributes to reducing the risk associated with the project and increases its attractiveness to investors. The combination of a positive NPV, an IRR higher than the cost of capital, and a fast Payback shows that the project meets and exceeds the minimum expected return requirements, consolidating its approval.

To deepen the analysis, a sensitivity test of the NPV was performed, evaluating the indicator’s behavior in the face of variations in the cost of capital and initial investment. The results showed that the project maintains its economic feasibility for most of the combinations tested. For example, even with an investment of R$14 million and a discount rate of 18%, the NPV would still be positive, reaching R$835 thousand. This finding reinforces the project’s robustness against adverse scenarios, indicating a considerable margin of safety.

However, the sensitivity test also identified the project’s feasibility limits. It was observed that if the initial investment increased to R$16 million, the project would start to show a loss from a discount rate of 16%. For investments starting at R$18 million, the project would already become unfeasible for all discount rates considered in the analysis. These inflection points are crucial for strategic decision-making, allowing investors to understand the risks and capitalization limits to maintain the venture’s attractiveness.

In summary, the results of the financial feasibility analysis for the development of a heavy electric vehicle in the Curitiba region demonstrate strong economic attractiveness. The positive Net Present Value [NPV] of R$5.67 million, the Internal Rate of Return [IRR] of 34.1% which surpasses the cost of capital of 16.04%, and the Payback period of 3.5 years converge to indicate that the project not only quickly recovers the initial investment but also generates significant value. These findings directly address the study’s objective, confirming the return potential and alignment with innovation and sustainability trends in the transportation sector.

4. Conclusion

This study sought to analyze the economic-financial viability of a project for the development of an electric-based heavy vehicle in the Curitiba region, considering a five-year horizon. It was found that the project demonstrated strong financial attractiveness, with a positive Net Present Value (NPV) of R$5.67 million, which signaled the creation of economic value for investors. Additionally, the calculated Internal Rate of Return (IRR) was 34.1%, a value significantly higher than the cost of capital of 16.04%, reinforcing the initiative’s return potential. The estimated Payback period of 3.5 years indicated a relatively rapid recovery of invested capital, contributing to the reduction of risk associated with the venture. These findings show that the project not only meets the minimum return requirements but also aligns with the growing trends of technological innovation and sustainability in the transportation sector.

The main contribution of this work lies in demonstrating the applicability of investment analysis methodologies to support strategic decisions in an expanding market, such as that of heavy electric vehicles. However, the project’s feasibility is conditioned by factors such as the accuracy of growth projections for the electric automotive industry and the precision in mapping the involved costs. Sensitivity tests showed that variations in the cost of capital and initial investment can impact attractiveness, with the project becoming unviable from R$18 million in investment. For future studies, it is recommended to conduct complementary scenario analyses, including more detailed simulations of regulatory changes and demand evolution, in order to mitigate risks and improve strategic decision-making.

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Article originating from the Final Course Work of the Specialization in Finance and Controllership of the MBA USP/Esalq

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