Are Hybrids a Waste of Money?

About three years ago, as the price of gasoline began creeping up, hybrid cars started becoming more and more popular. While this makes perfect sense, I always kind of felt that people were buying these hybrids – in particular, the Toyota Prius – in an attempt to own the “in” car.

My theory shifted dramatically when things really hit the fan earlier this year, and many of us were paying in excess of $4 per gallon to fill up our cars. At that point, owning a hybrid went from simply being the cool thing to do to the financially and environmentally smart way to get around town. After all, reducing your gasoline consumption can save both money and the environment.

So, owning a hybrid should be a win/win situation, right? Not necessarily.

While there’s no doubt that hybrid cars get great gas mileage, it’s not as if this increase fuel efficiency comes for free; you’re going to pay a premium to own that hybrid.

To illustrate what I’m talking about, let’s look at two cars that get great fuel economy: the Toyota Prius – a hybrid – and the Toyota Yaris – a non-hybrid. (I suppose you could choose any fuel efficient non-hybrid and swap it out for the Yaris, but for the sake of trying to keep everything relatively comparable, I stuck with another Toyota.)

Anyway, let’s check out the specs for these two cars:


  • PASSENGER ROOM: 96.2 cubic feet
  • HORSE POWER: 76 HP @ 5000 RPM
  • COST: $21,500


  • PASSENGER ROOM: 86.3 cubic feet
  • HORSE POWER: 106 HP @ 6000 RPM
  • COST: $11,550 MSRP

* Functional average fuel economy comes from Their site doesn’t produce direct links, so if you don’t believe the stats I have listed, feel free to check out their site. Even if you do believe me, it’s worth checking out their site!

So, for about $10,000 more, you’re essentially buying a slightly bigger car and getting 8.5 extra miles per gallon. Unfortunately, unlike several years ago, there is no longer a tax credit for buying a Prius. That credit expired in October 2007, so you can’t use that to help offset the higher cost of the car.

In order to recoup the extra up front cash expense, you’d need to drive your hybrid 560,000 miles over the life of the car, assuming an average gas price of $3.75 per gallon. And, keep in mind, by owning the Prius as opposed to the Yaris, you’re likely to pay more in interest (if you’re financing the car), personal property taxes and insurance.

(If you’d like to double check my math, you’re more than welcome to check out this spreadsheet.)

I know there are plenty of you out there who believe we should do whatever we can for the environment, no matter the cost. That’s fine, and that’s certainly your prerogative. But, keep in mind all of the other environmentally friendly products you could buy using that saved $10,000:

  • Replace every bulb in your house with CFL bulbs
  • Install reduced flow shower heads and toilets in every bathroom
  • Replace older appliances with more energy efficient models
  • Better insulate and seal your home to avoid energy leaks

Combining these things plus the probably many other things you could do in under $10,000 probably has more of an environmental impact than getting slightly better fuel economy. In essence, you’d be getting more bang for the buck.

So, long story short, while owning a hybrid car certainly is a great way to do your part to help with environmental issues, it might not be the most cost effective or productive way to get the job done.


  1. I guess it’s worth asking how much is 7.1 tons of CO2 emissions worth to you? For comparison, annual per-capita CO2 in the United States is 17.5 tons. Annual per-capita CO2 emissions are 4.4 tons.

    The Yaris is aimed at low-end car buyers, using cheaper materials and a smaller feature set. The Prius is in a different class altogether, with an in-dash display, back-up cameras, keyless entry and start, touch-screen, etc in the base model.

    So I guess the answer to the question “Is a mid-range hybrid cheaper to own than a low-end puregas if CO2 emissions are free?” is yes. Shocking revelations.

  2. I do not understand why folks are wanting to pay extra to project the image they get driving a green un-American car. They set a bad example on many levels, wasting their money and wasting their neighbor’s jobs. That is OK I fought for their right to be wrong.

  3. This is such an eye-opening article in hybrid cars. In this world of being “green” it’s not always easy to fully understand what’s best for our budget and we can best combine a product that is good for our budget AND the environment.

    Miss Gisele B.

  4. @Birney Summers

    I thank you for your service.

    You’ll note that the Prius is being compared to *another Japanese car*. I’d love to buy domestic if our automakers had had the foresight to focus on fuel economy. Instead, they lobbied again and again for lower federal standards, and now they’re playing catch up. They reap what they sow.

    Global warming isn’t an American issue. If we do nothing, It will haunt us long after this country is gone.

  5. Take a look at the Chevy Malibu Hybrid. Don’t forget to worry about Global cooling.

  6. Is money the relevant measure?

  7. You have to be careful here. You happened to pick a Toyota car that has one of the greatest MPG vs price on the market today. If you compare the Prius to more conventional cars the mileages can go to 150K miles for payback.

  8. Can you calculate the cost of gas over 2 years and compare to the hybrid? That would tell me about my savings and how long it would take to recover the $10,000

  9. good article, though i agree that the comparison is somewhat skewed. perhaps doing a side-by-side with a high-end Smart car would be more to the point?

  10. mike goodwin says

    My wife averages 56 mpg with her Prius she drives from Ft Lauderdale to Miami for work. So it was worth buying the Prius over both the Fit and the Yaris.

  11. @Birney

    Chevy Malibu Hybrid. Right, so I’m going to pay $1,300 more than the Prius for 27 mpg combined? How is that sensible again? I love the negative payoff period compared to a Prius there.

    I’m of course very worried about global dimming (what you meant by global cooling). Caused by particulate emissions, it has caused us to vastly underestimate the effects of greenhouse gases. When we stop spewing them into the air (like after 9/11 when they grounded all the planes), you see immediate, dramatic climatic effects.

    I guess you could have also meant the counter-intuitive fact that global warming will cause cooling in some areas, but that’s simply due to the massive amount of feedback and non-linearity in global weather, ie shutting down the mid-Atlantic current.

  12. What about safety ratings? I don’t know much about the Yaris, but I know the Prius has excellent crash-safety ratings. And I agree with Nate: the Prius, a tech-savvy geek’s dream car, is in a different class from the Yaris.

  13. I laughed at my friend who bought an electric car, because at the time he would have to drive it 10 years just to break even on a comparably powered car. Now, it doesn’t seem so crazy to help out the environment and my wallet. The sacrifice doesn’t seem so great to help preserve our earth.

  14. why are you comparing a prius with a yaris? the yaris rides like a tin can, i would suggest a mid level corolla to compare the prius to.

  15. Ever sat in a Prius vs. a Yaris? You’re getting a lot more than a “slightly bigger car.” The difference is quite dramatic. The Yaris is a tiny cramped shoebox car while the Prius has space comparable to a Camry, and has already been mentioned, is a much better equipped car. This is an apples and oranges comparison. Why not compare the Camry hybrid vs. a comparably equipped conventional Camry?

    At the same time, I see what you’re saying about the price difference. I bought a car in March and really wanted to get one of the new VW diesels (which I think are still not available), but would have easily cost me an extra $10-15k extra over the ’04 Passat wagon I found at Carmax for $15k. I can buy a whole lot of gas for that $10-15k I saved and my Passat gets about 23 around town and 30-32 on the highway. I can live with that.

  16. HI,

    You’re right about economical issues. Prius is not a good deal at all. Yaris is a bad comparison, but anyways – Prius always looses in its class – when prices are compared.

    But I don’t agree about eco part – Prius is not eco friendly – it’s just marketing slogan.

  17. I just bought my 2nd Prius & I agree that on a straight cost basis the fuel ecconomy will never pay the difference.

    Reason I actually bought these cars.

    The Prius is is big enough. We are both tall and large. I don’t fit in a Yaris. The Prius not only fits, it is designed so that a geezer like me can get in & out easily.

    I have gotten accustomed to the creature comforts of the upper end trim packages. A Yaris or equivalent with the features of a $21K Prius cost a lot more than $11K

    My 2002 Prius is the best built car I have ever owned. Superior even to my old Honda’s. I fully expect to own it another 6-8 years & still enjoy driving it. I expect in 2016 it will still be in good enough condition to sell in good concience.

    Crash safety: The Prius is too light to do well against a minivan or pickup truck, but the most of the high efficiency vehichles like the Yaris are so light that they aren’t safe hitting a car the weight of a Prius.

    The fuel ecconomy is nice but the low air pollution numbers and how quiet it is inside & out were bigger sellers to me.

    The one down side is that I have to be very careful in parking lots. When running on battery at low speed a Prius is so quiet that pedestrians don’t hear me coming.

    But the best way to save the environement is to buy a 3 year old small car. Spend the money to keep it running effieciently and cleanly. Drive it forever. Because building and delivering a car creates over half the pollution it is responsible for in it’s life time.

  18. I am hoping to find another job fast, but we all know how that is. ,

  19. Avoid those miserable colds. ,

  20. I own a Prius, it is a very good car. I would not say that it is a luxury car by a long shot but it is also not a compact by a long shot. I regularly get 55 plus mpg with it during the summer months and 50 plus in the spring and fall and somewhat less in the winter after I put on my snow tires. My biggest reason for purchasing this vehicle is to keep money from going to the greedy folks in the energy business.

  21. It’s not about initial cost vs. long term savings. It’s about how much fuel our cars consume to get from place to place, and how much emissions come from said trips. Some things are not always about $. 🙂

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