The Toyota Prius promises 48 miles per gallon using a hybrid of gas and electric engine. The advance technology allows it to achieve a much higher fuel efficiency. With the price of gas approaching $4.00 a gallon with no end in sight, sales to Prius’ have been rising. The reason for buying a Prius should be the desire to stick it to the Middle East and reduce gasoline consumption. However, it’s not a legitimate reason for saving money.

With some basic back of the envelop calculations (figuratively), the Prius is clearly not economically efficient. To make this determination, I took the base price of the Prius at $21,100 and the base price of the comparable vehicle, the Toyota Corolla at $15,250. The Prius is really just a fancy Corola. The difference: $5,850. That’s the “premium” you pay for sporting the “green” vehicle. Okay, gas is really expensive you say. It’ll pay for itself. Assuming that the average driver drives 12,000 miles a year and keeps the vehicle for five years, I found the following:

• At $4 a gallon, you have to drive 114,763 miles to break even. Assuming you drive 12,000 miles a year, it’ll take 9.6 years of driving just to break even.
• Assuming you keep the vehicle for five years, you have to drive 22,953 miles a year paying average gas of $4 a gallon. That’s a lot of driving, or about 63 miles a day, every day.
• If you think gas will keep rising, it’ll have to go to $7.60 before you break even assuming you drive 12,000 miles a year for five years.

Given the results, to support the mass acceptance of the Prius, we’d have to see gas prices at $7.60 a gallon. From a policy standpoint, the government should subsidize the hybrid “premium” of $5,000 or tax gas an additional $3.60 to raise it to $7.60. Until either event occurs, or a mix of both, we’re not going to get mass adoption of hybrids.

Bottom Line:

Don’t buy the Prius to save money, buy it to feel good about yourself in that you’re reducing your gasoline consumption. Or, just recycle or ride a bike.

See my analysis spreadsheet (Google Docs).

There’s no definitive answer on what is Generation Y. However, most research and publications agree that the birth years are typically between 1978 to 1993. To put into perspective, there are 80 million Baby Boomers, 40 million Gen X’ers, and 75 million Gen Y’s. Whether these figures are accurate are aside from the point. What matters is the relative size of the generations. Gen Y is nearly the size of the baby boomers.

As of 2008, the youngest Gen Y is 15 and the oldest Gen Y would be 30. By 2011, every Gen Y is eligible to be in the work force, front and center with the baby boomers.

They are also called:

• Generation Y
• Generation Why
• Generation Next
• Millennials
• Echo Boomers
• The Digital Generation
• The Internet Generation
• What else?