Is the Prius Really Free?

The cheapest transportation by car, maybe, but strictly speaking, not the least expensive way to get around.

 

do what i did, buy one new, drive it for 2 years, get someone to hit you, its totaled, you get all your money back plus $1400 (gotta pay for the gas and oil changes right??)

 

Free is an exaggeration. What it really boils down to is that, when considering the purchase of a Prius and some other new car, the life-of-the-car gas savings ought to be factored into the purchase price.

So forget about the comparison to used cars, maybe forget about resale value, forget about differences in lifetime repair costs. (All of those are legitimate concerns for figuring life-of-the-car costs, they just aren't the central point here.) I would not even bother with "discounting" the future savings, because right now (and for the forseeable future) my guess is that the real after-tax rate of return on money is zero or negative. Just go ahead and calculate what the gas savings are worth, for the Prius compared to each additional car you are considering purchasing, and subtract that from the Prius' price to get an approximate apples-to-apples life-of-the-car cost comparison.

Why use vehicle lifetime gas mileage? Because even if you sell it before then, the sales price at that time ought to reflect the remaining gasoline savings. It's one of the reasons used Prii have retained their value.

In my case, in 2005, I considered a Taurus, and estimated at the time that the Prius would save about $10,000 in gasoline costs over the life of the vehicle. (Because almost all our driving is urban, and the Taurus city number was about 16 mpg.) So to make the price comparison, I netted $10K out of the cost of the Prius.

When you do that, as far as I could tell, the Prius becomes cheaper than just about any other new car of the same size. And for most cars, the Prius is cheaper by a large, large margin. At least that appeared true in 2005. Basically, you do the math, a Prius is no more expensive than a Corolla, in terms of life-of-car ownership costs. (FYI a Corolla with an automatic gets 31 MPG, so you could have a Prius at $25K or a Corolla at $18K and it'd cost you about the same over the life of the car.)

Want a rough rule of thumb? Assume a lifetime of 150,000 miles. Assume $4/gallon gas average over that lifetime. Assume everything else about the Prius and comparison car will be the same. If the comparison car gets the following mileage, you'd save this much in gas cost over the life of the car:


40 $2K
35 $4K
30 $7K
25 $11K
20 $17K

So, not free, but cheaper than the purchase price suggests.

 

Hmmm... I would agree with others above who say that no car can be considered a "free". The only way this may be possible is as a correction for an purchase of a very poorly chosen vehicle where the difference in fuel economy eventually overcomes the purchase price. (i.e. someone who foolishly purchased a LARGE SUV for solo commuting and then replaced it with a Prius). Even in such case, it would be assuming they got reasonable return on selling the SUV *and* drove the Prius long enough to realize a positive overall difference.

Either way, it is merely a correction for an earlier poor decision.

Bottom line, Prius is a fine vehicle that provides great fuel economy value for it's size and feature offerings, but is by no means "free" on it's own, nor the cheapest mode of transportation. No *new* car ever will be.

The most economical car will always be a second-hand car in good shape which registers reasonable fuel economy and relatively low repairs... such as a 3-4 year old Corolla, for example.

 

A used (3-4 years) Civic or Corolla is probably better value, if it's a 2nd car and you don't drive much. Trouble is they aren't cheap if you want to buy a good one traded at a dealership. You might wind up paying 70% of the cost of a new one.

If you want to buy a new car, the Prius would be more cost effective in terms of mileage and depreciation.

 

I'll give you this scenario. When my previous car died I could have continued to drive our spare vehicle which was a 1991 Ford Explorer. The thing ran great, but I drive about 450 miles a week. The explorer obviously had $0 in payments.
To fill the gas tank of an Explorer it costs about $85 once per week. So in a month that = $340 month. My Prius payment is $295, and I only use about $25 a week now so that makes $395 So my new Prius only costs me about $50 per month.

 

I stand corrected. Shoes and bicycles are much cheaper. I was, of course, talking about gasoline-powered cars. A used reliable econobox is cheaper transportation than a new Prius.

Why would you forget about repair or maintenance costs? The cost of a car is what you paid for it, plus all the money you put into it (gas repairs, oil changes, etc.) minus what you sell it for if you don't junk it. There's also a cost in environmental degradation, but of course, society pays that, and the individual owner pays only insofar as s/he is a member of society.

People buy cars for many reasons, but if your primary objective is cheap transportation, and you've already decided it's got to be a car, a recent-model used car is far more economical than any new car.

Also, in making the assertion that the return on money today is zero or negative (a very questionable assertion) you ignore that money spent on a car loses value as the car depreciates (i.e. a big chunk as soon as it rolls off the car lot) and if you buy the car with borrowed money, you're paying interest on that money, whereas money in the bank pays you interest, even if it's not much right now.

 

Compare Apples to Apples

Any new car, compared to a Prius, will cost gas, maintenance, and will depreciate. Plot the Prius against two or three choices.

Know that a Prius depreciates less, costs much much less in maintenance, and less in gas (only use regular gas).
(Taxis have done over 300,000 miles with only oil changes)

So if you debate between a Yaris and a Prius, it would be like taking 15 years before the Prius outdoes the Yaris. Yet they are very different cars in size, comfort and handling.
Same with the SmartForTwo, which requires Premium gas, can't hold 65MPH steady in a crosswind, only seats two.

If you compare Prius to a Corolla, the difference would be around 10 years, five years with a Camry, etc.

Since the Prius is among the top 5 cars that don't depreciate much, and that gas can only go up in price, and the Prius can be converted to full EV on the cheap, then go for a Prius.

Whatever car you choose, do a 10 year plan.

My 10 year plan is:
- 5 year to pay for the car (I got shafted by the US/Can rate, paid 30% too much)
- 1 year to pay for battery upgrade (in 3 years...the EV kits are getting cheaper !!!)
- 4 years of no car payments and almost no gas payments
- 10th year either keep or resell, depending on the market. I can keep it 20 years easy.

If I wouldn't have gotten the Prius, for the 39K Can$ (including Quebec sales tax), I could have gotten an Audi A4, or a entry level BMW, an Acura, or a Camry.

I was looking into a 4/5 seater car, to replace my 8 yr old Sienna. Our kids are big and don't follow us anymore.

If I hadn't bought the Prius, I would not have bought a Hyundai Accent or a Honda Insight or a Yaris, but another 35k$ car.

So my Apples to Apples, say between an Audi A4 & the Prius....the Prius won after I did a test drive of both cars.

To me, the A4 was a real disappointment and the repair/maintenance costs on the A4 can be costly, and the A4 is "recommended" for Premium gas and not Regular, which just adds over 20% of the fuel cost.

 

So that means we should break even by May 18, 2010 right?

BTW, I live near Charlotte, NC and the gas issue has nearly reached ridiculous proportions. There are lines literally 1.5 miles long for the gas pumps. Gas stations all over are empty. My wife said she hasn't seen lines for gas THAT bad and she has been around since 1947.

 

Considering the economy these days and how much you owe on the car, it's probably not a bad idea to take the $3k and put it toward a reliable econobox.

 

nah, i drive 450 miles a week i dont have the $3,341 dollars for gas

 

Easy answer is I agree. My other car got 19 mpg. The money I save on gas is 2/3rds the monthly loan payment AND I get a new(er) car with more features. So, I bought a used Prius and love it so far.

 

$85 a week *52 weeks /12 months= $368...

cost of adding 400% more air and particle pollution to the environment... PRICELESS

i dont think there is much of a debate going on as to whether we as a planet are headed in the right direction or not, correct??

so, now we need to think on how we got to such an undesirable position to begin with...

maybe we should take a hard look at the priority we set on short term financial goals??

 

YES! The prius is the right car because it pollutes less - although hybrids are a rather small step in the right direction. The fact that the prius is a good value is a bonus in my mind - a very fortunate bonus, but still secondary.

If it turns out that we need to pay more (now) to avoid climate upheaval then so be it. Internalize the costs of pollution and in the long run (100 years plus) our economy will still exist.