Toyota Prius: Reasons to Steer Clear
By: Staff

By Althea Chang
Cost-conscious environmentalists might need to think twice before buying a popular hybrid Toyota Prius.

Tax credits are no longer available for the Prius and maintenance costs for the hybrid may be higher than for gasoline-powered vehicles.  Beyond that, the mining and fuel required for the transportation and production of the batteries may not actually reduce your carbon footprint as much as you’d expect.  Plus, you can actually get gas mileage that’s just about as high with a small gasoline-powered car.

“Especially in today’s market, where car buyers are more price-conscious than ever, consumers are looking for the strongest values out there. Because of their price premium, [hybrids] do not offer the strongest value proposition,” says Joseph Barker, auto analyst at research firm CSM Worldwide, a market research firm for the auto industry. “There are plenty of small car alternatives that provide 20, 30 even 40 miles per gallon,” Barker notes.  The fuel economy rating for the 2009 Prius is 45 to 48 miles per gallon.

No More Tax Credit
Tax credits are no longer available to Prius buyers (Stock Quote: TM), meaning you’ll end up paying thousands of dollars more today than even a year ago, making it harder to justify the price tag.

Federal tax credits for hybrid cars are phased out after 60,000 of the eligible vehicles are sold.  Introduced in 2000, the Toyota Prius hit its 60,000 mark halfway through 2006, and as of the 2009 model year, tax credits are no longer available.  For the 2008 model year, the federal tax credit awarded to Prius buyers was $3,150, according to the IRS.

Even the tax credit on the Honda Civic Hybrid (Stock Quote: HMC) has been phased out.  The last tax credit for the Civic Hybrid CVT was available through the end of December.

In addition, since gas prices are currently at about $2.05, according to the U.S. Energy Information Administration, compared with more than $4 last summer, it takes even longer now to benefit, let alone break even.

“Without question a hybrid takes a lot longer to break even than a diesel engine or a gasoline engine,” Barker says.

The True Cost
The current list price for a Prius is $22,000 plus $750 for delivery and handling charges, according to Toyota spokesman Bill Kwong. Customers may be able to get a cash incentive of up to $750 or an APR of as low as 0%, depending on the dealer and region.

Meanwhile, the Toyota Yaris, which starts at $12,205, can deliver 35 to 40 miles per gallon, notes Barker.  “You don’t necessarily need to pay that [Prius] premium to get high gas mileage,” he says.

“Because of the technology, you run the risk of higher maintenance costs and higher repair costs,” with a Prius, adds Barker.  “Not everyone is holding onto their vehicles for eight or 10 years.  That may be an investment that never breaks even or pays off.”

Going All Electric
If you’re really looking to make a statement with an environmentally-friendly car or do more to reduce our country’s dependence on foreign oil, going totally electric would go further in making your point.

If you don’t tend to drive long distances, you won’t even need to use gasoline in a Chevy Volt from General Motors (Stock Quote: GM), due out in 2010.  The Volt primarily uses its battery to power the engine, and gas is used to extend the range of the vehicle when the battery power is depleted.  On the other hand, the Toyota Prius relies mainly on gasoline power and uses its battery to improve the efficiency of the vehicle.

Using only electricity to power your car won’t reduce your carbon footprint as much as you’d think at first blush, however.  Electric grids rely heavily on petroleum, coal and natural gas for energy in addition to wind, geothermal and other natural energy sources.

Battery Concerns
The Prius battery comes with an eight-year or 100,000-mile warranty, whichever comes first.  If you need to change the nickel metal hydride battery (a rare occurence), according to Toyota spokesman Kwong, a new one will cost about $2,300, plus a $300 to $400 dealer fee. That's reduced from its previous price tag of $5,500. 

Although the need to replace the battery may be rare, and it’s cheaper than before, the environmental impact of producing the batteries in the first place is noteworthy.

The nickel for the Prius’s nickel metal hydride battery is mined in Sudbury, Ontario, and smelted nearby.  Toyota buys about 1,000 tons of nickel from the facility each year, ships the nickel to Wales for refining, then to China, where it's manufactured into nickel foam, and then moves on to Toyota's battery plant in Japan. According to a "Dust to Dust" study by CNW Marketing Research, the estimated start-to-finish journey of the nickel is more than 10,000 miles by ship and diesel locomotive.

“That alone creates a globe-trotting trail of carbon emissions that ought to seriously concern everyone involved in the fight against global warming.” the report says.

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