Electric van company Workhorse announced today that it will provide 50 custom-made all-electric vans with 100 miles of range to UPS for a price lower than that of comparable off-the-shelf diesel vans, without subsidies.

Getting cost-competitive with diesel vans in acquisition price is a big step, especially because total cost of ownership (TCO) is expected to be lower on electric vehicles. That means the Workhorse vans could be significantly cheaper than comparable vans over time.

TCO is generally lower on electric vehicles because fewer moving parts means less maintenance and, as long as filling up a tank with gasoline costs more than charging up a car on electricity, electric vehicle owners can expect to save over the lifetime of the vehicle. But electric vehicle upfront cost tends to be higher than that of a traditional vehicle because lithium-ion batteries are relatively expensive.

Workhorse CEO Steve Burns told Ars in an email that his vans have reached cost-parity with off-the-shelf diesel trucks in part by making the battery pack lighter. "The initial cost parity plus the fuel and maintenance savings of our trucks vs. a diesel over the lifetime of the truck are substantial," Burns said.

Workhorse, which has been focused on building electric vans since 2015, sources the battery cells from Panasonic (the company that has partnered with Tesla to run the Gigafactory) and assembles the battery packs in-house.

The partnership with UPS is also quite interesting. Per the terms of the agreement, UPS will test the vans in Los Angeles, Dallas, and Atlanta through 2019. Then, according to a UPS press release, "UPS and Workhorse will fine-tune the design in time to deploy a larger fleet in 2019 and beyond."

UPS hopes that after the second rollout, it can make the electric van a "standard selection" when the company needs to add to its fleet. UPS says it currently has about 35,000 comparable diesel or gas vans. We can assume that as those are lost to attrition, all-electric could be a viable option for many situations.

UPS has been in headlines lately due to its aggressive moves toward alternative-fuel vehicles. The company signed a deal with Daimler in September for a number of Fuso eCanter trucks with a range of 62 miles, which would primarily be used in making short-run deliveries around city-centers. Given that electric trucks are much quieter and emit less local pollution than standard gas or diesel trucks, they're especially equipped to operate in dense urban areas.

UPS has also put money down for 125 Tesla Semis, which the company says is the largest preorder to date. Those semis won't be ready for the market until at least 2019, however. In the meantime, UPS has ambitious goals to hit: it has promised to make alternative fuel or advanced technology vehicles a quarter of its vehicle purchases by 2020, and it has promised to make a quarter of the electricity it uses renewable by then as well.