Buying A Prius Is An Emotional Decision

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Toyota PriusHave you seen all the Toyota Prius commercials lately? The ones with the people dressed up as foliage and climbing on top of one another? It was to highlight how “green” the vehicles are and announce that Prius was launching another generation of the hugely popular hybrid-electric. At first, my wife didn’t even realize they were people and I, to this day, think it’s just a little bit creepy. 🙂

However, despite the creepiness of the ads and the whole slew of new hybrid-electric cars, I still would love to have a Prius (or a Tesla!). The only problem I have is that it’s not a financially sound decision. It’s an emotional one (which is fine too!).

The distinction may seem unnecessary, right? People buy cars for emotional reasons all the time. You buy one type of vehicle over another, in part, because of what you think it says about you (which is fine!).

Buying a car for emotional reasons is perfectly fine… as long as you know that’s what you’re doing.

Making an emotional decision is perfectly acceptable! It is your money, you earned it, you can spend it however you like. You can buy a car because you like new car smells or because you want to make a statement. You did the work, you get the spoils! The point of this post is that it’s important to recognize when you’re making an emotional decision and not to trick yourself into believing it’s a financial one.

The Prius

If you really want fuel economy, there are plenty of cars that give you similar performance without the toxic battery and with a stick price under $22,000 starting price. If you look at the third generation Prius, you’ll see that the estimated MPG is 51 city, 48 highway. Those are pretty good numbers right?

The Smart Fortwo

Take a look at the Smart Fortwo, a tiny little vehicle that has the ability to get up to 45.9 miles per gallon with a starting price of $12,000. Ben at Ecomodder took the Smart Fortwo on a test drive where he listed the pro’s and con’s of the Fortwo.

The Difference

From a strictly financial perspective, the Smart Fortwo is a better value than a Prius. Assuming all other financial costs are the same, which is a huge assumption given the Prius’ battery and the Fortwo’s diminutive size, gas would need to be $5 a gallon for 26 months before the Prius’ fuel-sipping hybrid premium would “pay off.”

While 26 months doesn’t seem like a long time, $5 a gallon gasoline is also really really expensive. Last year, the average retail gas price peaked at $4.054 during the week of July 14th, 2008. California, known for ridiculously high gas prices, peaked at $4.588 during the week of June 16th, 2008. (Gas prices data provided by the Energy Information Administration)

So while a Prius is nice and does conserve fuel, it’s important that we understand it’s an emotional decision and not a financial one. Too bad we don’t have a clunker we can trade in. 🙂

(Photo: MaryMactavish)

{ 33 comments, please add your thoughts now! }

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33 Responses to “Buying A Prius Is An Emotional Decision”

  1. tlm says:

    The plate makes me laugh. “X Warmer”? As in, ex-global-warmer? Right, because halving the amount of gas you use gives you a “get out of global warming guilt free” card. I’m sure those people never use electricity, heat, a/c, manufactured/shipped goods, or fly in a jet. What a joke!

    That said, article is interesting and correct. The Prius sure is an emotional decision.

  2. MoneyEnergy says:

    I don’t have a car yet, but I’d love a Prius. They look great and although they may not be perfect, they’re in the top 5%. I just loathe the fact that cars now are the price of an entire university education (depending on where you live, of course).

    • dilbert69 says:

      Really? Four years at a top university can exceed $200K, not to mention the opportunity cost of lost wages. Few cars cost anywhere near that.

  3. Travis says:

    Want to “save” the environment? Buy a old used Honda Civic. The Prius is a status symbol. Defiantly an emotional decision because if common sense is used it wouldn’t be purchased. Top Gear ran the Prius against an M5, the M5 got better gas mileage following the Prius. If you are rich by a Tesla or if you live in California the Hydrogen powered Honda. Better yet buy a bike and ride to work.

    • Trent Hamm says:

      The M5 got better gas mileage running “pedal to the metal” – over 100 miles per hour. If you drive like that, the difference will be made up easily in traffic tickets.

  4. My Journey says:

    1000% agree with you! A prius is the new Benz or BMW, its all about fitting in. You should check out:

    I found a bunch of Honda’s with similar ratings and $8K less.

  5. Sherry says:

    How does the 3rd Gen. Prius stack up against the new Honda coming out at the end of this year?

  6. The other Schmitty says:

    I didn’t actually do any calculations, but I believe your numbers are flawed because the Smart requires premium fuel while the Prius only needs regular. Also, I don’t think a site like Ecomodder is the best source for fuel economy data unless you’re a hypermiler. The EPA’s real world results from 42 cars estimates 38.8mpg.
    Of course the Smart is also MUCH smaller than the Prius, and by many accounts a truly horrible car 🙂

    Consensus on the ForTwo
    Consensus on the Prius

    • Jim says:

      Ooooh, I didn’t know it needed premium. While I agree that Ecomodder isn’t a “typical” result but I wanted to show what could be done if you were really focused on fuel efficiency.

    • Jon says:

      The Smart car can run on regular fuel, but your MPG and performance will be affected.

      I own a Smart Cabriolet and I get an average 55 MPG highway. If you can find 0% ethanol fuel, run that and get much better MPG and performance. Also use a full synthetic oil and filter such as Royal Purple, Amsoil, or MPT Industries to get better MPG.

      Keep in mind the Smart car is not your average cheap car, it is built to last for many years, afterall, it is manufactured by Daimler AG.

  7. Paul says:

    a few things to consider- the smart fortwo’s EPA ratings are 33/41, vs. the prius’ 51/48. An “apples to apples” comparison would be best, as a driver who can get 46 mpg in a smart may be able to get more than 51 in a prius.

    That said, I’m not sure how you recoup a ~$10,000 price difference in 26 months. You would need to be saving $384 in gas per month.

    Driving 1,000 mi in the 50 mpg Prius, with $5 gas
    you would use 20 gallons, or $100.

    Driving 1,000 mi in the 33 mpg Smart, with $5 gas you would use ~30 gal, or $150.

    You would need to drive over 7,000 mi. per month to recoup the difference in purchase price in 26 months, and that’s with $5 gas and the lowest mileage for the smart.

    With the gas price where I live (2.60) and the mileage you stated (45.9 for the smart, it would take somewhere in the range of 1.5 million miles for them to balance out (only counting fuel and purchase price, which isn’t really realistic.)

    The bigger issues may be: does one need a car with more than two seats? What would the prices be with the options you want? Thinking of it in cost/mile can be easier than miles/gallon.

  8. Jon says:

    I dig the Prii scene, but they’re just ugly.

  9. Anthony says:

    “51 city, 48 highway”. The Prius gets better city mileage?! LOL.

    Let’s do a hypothetical. I drive 15,000 miles a year. Car A gets 27 mpg, and Car B is a Prius with 51 mpg.

    At $2.00 a gallon,
    a. it costs Car A $1,111.11 a year.
    b. it costs the Prius $588.24 a year.
    Difference of $522.87 a year.

    At $2.50,
    a. Car A: $1,388.89
    b. Prius: $735.29
    Difference: $653.60

    At $3.00,
    a. Car A: $1,666.67
    b. Prius: $882.35
    Difference: $784.32

    Worst case diff (as of today): $784.32 / 12 = $65.36 a month.

    Okay, now the whole point of this: A new Prius is $22,000. Pick an auto loan term and an interest rate… If I can find a car that gets 27 mpg (non-hybrid), I can buy a new $18,000 car, and it’d be a better deal than a Prius.

    (The monthly car note savings is better than the $65.36 a month the Prius will save you in gas…)

    Of course, this makes numerous (perhaps faulty) assumptions, the price of gas can increase dramatically, and maintenance issues have not been taken into account.

  10. mbhunter says:

    An owner of a Fortwo told me that driving it in high winds is “interesting.” The gas mileage is better but not so much better that I’ll fear for my life every time there’s a stiff breeze.

  11. Glenn Lasher says:

    You mentioned the Tesla, and it brings up a point . . . electric cars (pure electric, that is) shed a lot of the maintenance costs of gasoline and hybrid cars because they have shed two of the most unreliable components (whereas the Prius sheds only one of the two): the engine and the transmission.

    No transmission fluid; no oil; no antifreeze. The remaining fluids (brake and power steering) generally are the well-behaved fluids in a car, rarely needing changing or topping up.

  12. Patrick says:

    The Smart fortwo is a nice little car that is inexpensive, but should get much better gas mileage for the size of the car. I can see you point with the prius, but I still think the Smart car has work to be done on it to continue to improve its mpg.

    I love the look of a Tesla, especially the new sedan version that is coming out, the Model S.

  13. prufock says:

    One thing that occurs to me: I can’t for the life of me imagine driving a Smart on the highway. How much would you really be saving if you had to buy a second car?

    • dilbert69 says:

      I saw someone driving on on I-880 south in Northern California less than an hour ago. They seemed fine.

    • superch665 says:

      Smart cars seem to be all over Houston, including the Interstates. Personally, I consider it a death wish and can’t believe anyone dares it!

      • Anthony says:

        LOL. 🙂

        I have lived in Alabama all my life and now in Louisiana for the past year. SUVs and trucks make up more than 1/2 of the vehicles on the road. Smart cars are certainly a death wish versus those larger vehicles.

      • Jon says:

        Do you consider driving a motorcycle a death wish too? Many people dares driving them.

  14. ian says:

    An ROI of 26 months is great! Unfortunately, and as other posters have pointed out, that is not the actual ROI on these two cars.

    I recently did a comparison of the Toyota Highlander vs. Toyota Highlander Hybrid. I think everyone will agree that these are pretty similar cars. The Hybrid version gets 27/25 mpg with combined 26mpg for $31,577 invoice. The standard version gets 18/24 with combined 20mpg for $23,134 invoice. The difference of $8,443 and 6 mpg is not made up for 17.3 years (at $3/gal) or 10.4 years (at $5/gal).

    This ROI is too long to make it reasonable. What would be reasonable? In my opinion if the ROI is less than the loan terms or the time you expect to keep the car, then it is a good deal. In my case, I would be looking for something with ROI less than 5 years.

    I looked at all of the following hybrids and none of them had an ROI of less than 6 years even at $5/gal (when compared against their non-hybrid versions). >> Saturn Vue, Toyota Highlander, Mercury Mariner, Mazda Tribute or Ford Escape.

    I wanted a hybrid but unfortunately will pass.

    • Damon Day says:

      Ya, the sad thing is that the government will be using our tax dollars to give incentives and rebates to make up for this clear financial gap that you are talking about Ian. They use our money all the time to try and influence us into certain behaviors.

  15. Bad_Brad says:

    I’m also in the “buying a Prius is more of a political statement than a sound financial move” camp, but in fairness, there is a benefit to driving a Prius in that in some cities, you are allowed to drive in the HOV lane if you are driving a hybrid. And in some cities during peak hours, if you have a long commute, that could save you an hour of commute time every day. For someone who values his/her time, and who does not have a viable carpool buddy, this could easily make it worthwhile to get a Prius or comparable hybrid vehicle.

  16. Dan says:

    I don’t think it’s reasonable to compare the Prius, with an interior volume similar to a Camry, to a tiny thing that can hold two people and 4 bags of groceries then declare the large one a purely emotional choice. There are many pragmatic reasons for wanting the Prius over other vehicles.

    However, I’m currently considering a new vehicle and I’ve been crunching the cost of ownership numbers. I’m looking at the numbers over 10 years, or until a vehicle makes it to 150,000 miles (estimating 15,000 miles per year). What I’ve found is that it’s really tough to beat the Prius on price. Although I didn’t come to the same conclusion as The Simple Dollar did, the Prius doesn’t seem to be the cheapest car that could possibly satisfy my needs. That seems to go to the Honda Fit. The Prius is right at the top of the list, though. Rough estimates have the Fit at 3,100/year and the Prius at 3,250/year, that includes several years of driving after the car is paid off.

    For the money you get a decent sized vehicle with a comfortable and flexible layout. That could fit a lot of somewhat objective requirements. At this point, emotion is the only thing that could potentially push the decision over the top. Even if it does that, I don’t think I could qualify the decision as an emotional one. If I was going on emotions alone I’d probably go get a Camaro.

    • Matt says:

      I was waiting for someone to say this! I totally agree. Additionally, if you get a lightly used Prius the argument for the Prius becomes more compelling. People are reporting the vehicle remains stable and efficient well into the 200,000 mile range, which isn’t a complete shocker a Toyota. Various members of my family own Prius’s, two of which have well over 170,000 miles and are still going strong.

  17. Karen says:

    Just a thought…if they pass Cap & Trade, gas WILL be $5 a gallon.

  18. cys says:

    “If you really want fuel economy, there are plenty of cars that give you similar performance without the toxic battery and with a stick price under $22,000 starting price.”

    Tell me if you can find any car that does not have toxic battery.

    Don’t tell me lead-acid battery is not toxic.

  19. N says:

    A Prius can hardly compare to Mercedes. A Prius hit the back of our Mercedes (with steel bumper beneath the fiberglass) and did $500. of damage to replace a fiberglass bumper cover on our car…but totaled the Prius, crunched the front end completely, buckled the driver door and my husband had to work to get the door open for the young “fuel economist” to escape the horror! Think twice about saving a few gallons of gas or saving your life, we have photos of this!!

  20. Nikki says:

    This isn’t really a fair comparison. The two cars are nothing alike. If you’re going to compare, at least do so with cars of similar size and style. Compare the Prius to an economy hatchback, not this freak of a circus car. C’mon.

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