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Mar 30, 2012

How Our Prius Paid For Itself and Put $10,000 Back In Our Pocket

 

Our 2006 Prius topped 100,000 miles last weekend as we drove on Interstate 70 through Colorado’s Glenwood Canyon, prompting my wife and me to wonder how much money we’ve saved. The result, calculated conservatively, is an eye-popping $34,441—most of which comes from becoming a one-car family living in an urban core when we bought the Prius. That’s $10,000 beyond the sticker price of the car, so we could say we got a free car and paid for some nice vacations.

Here’s how it happened:

In March 2006, I started work at the Detroit Free Press, moving from Des Moines, Iowa. I had always lived inside the city whose name appeared on the newspaper where I worked, disdaining the idea of suburbs and sprawl. I had about a 15-minute drive to work in Des Moines—a local joke being that everything there was a 15-minute drive. I also was struck in my 18 years in Des Moines by the folly of sprawl, paving over farmland ever farther away from the core of a pleasant, safe city, creating unnecessary commutes, wasting time, money, land, and fuel.

In Detroit, Angye and I moved into a high-rise apartment downtown, less than a mile from my job. We were paying for two parking spaces and my car was sitting most of the time during the week because I walked to work or took the funky People Mover, an elevated train on a 3-mile loop.

We each had a Toyota Corolla and admired the technology and fuel economy of the Prius. “What if,” we asked after we had been in Detroit about a month, “we traded in both of our Corollas for a Prius?” About a week later, we felt like we were in a spaceship as we pulled our “super white” Prius onto Southfield Road. (This is not meant as a Toyota endorsement. It’s great to see many companies producing fuel-efficient cars these days and pushing new technologies.)

We had to make some adjustments—most having more to do with the oddities of living in Detroit, which lacks full-service grocery stores in the city limits and effective mass transit throughout the metro area—but never were inconvenienced. In fact, we walked home from baseball games, concerts, and festivals giddy that we weren’t sitting in bumper-to-bumper traffic.

I typically did not have access to a car during the day, but never was deprived. My dentist, barber, bank, favorite restaurants, and most other routine stops were within walking distance or a 50-cent People Mover ride. We planned weekend shopping trips for groceries, hardware, clothing, and other needs—trips that we likely otherwise would have taken separately. Having only one car added to our togetherness and our feel for our neighborhood.

In November, we moved to Basalt, Colorado, so I could work at RMI. We live six miles from work, and I wondered how it would be with one car. The answer is that it’s no different. Now that it’s warm, I can bike or run to work, and the mass transit options in the rural Roaring Fork Valley actually are better than in metro Detroit.

Before RMI’s Reinventing Fire was written, we were among the people living its recommendations for using autos more productively. “We can eliminate the need for many trips entirely, and we can use vehicles in smarter ways, improving access to places or goods with fewer, shorter, or faster trips. …" the book says. "We must explode a deeply held myth—that efforts to reduce travel inevitably take away cherished freedoms, choices, and mobility.”

Rather than lost freedoms, my outcomes were reduced stress from less time commuting, more time with my wife, and greater connection to community. Humans see and experience things around them much more richly on foot or by bicycle than in a car. Looking at our savings over six years—much more than we expected—it seems that if families can save a few thousand dollars a year along with hours of time by living closer to work and driving less, we can create demand to rebuild our cities into closer-knit, sustainable communities as we cut our dependence on oil and reduce environmental damage. That’s a better life.

Here’s a detailed look at the savings shown in the accompanying graphic:

I assumed an average cost of gas at $3 a gallon. The U.S. average from when we bought our Prius in April 2006 until it hit 100,000 miles on March 25, 2012, comes out to $2.93, but prices in both Detroit and Basalt typically run above the national average. My other assumption was that our second car would have been one of the Corollas we traded in, which averaged about 32 miles per gallon.

  • I conservatively estimate that had my wife and I each had a car, we would have put 10,500 miles a year on each. (The U.S. average is 13,476.) Based on the 10,500-mile estimate, we reduced our vehicle miles traveled over the six years by 26,000 total. Savings: $2,437 for 812 gallons of gas we didn’t have to buy.
     
  • Better yet, the Prius gets a year-round average of 45 mpg, allowing us to cover the 100,000 miles with 903 gallons less fuel than with the Corollas. Savings: $2,709
  • Insurance is pricy in downtown Detroit. My agent there tells me a second car would have cost $140 a month to insure. Then I calculated $50 a month for a second car in Basalt. Savings: $9,630

  • As urban dwellers, with one car versus two, we saved on a parking space at about $75 a month for the 67 months we had the Prius in Detroit. Savings: $5,025

  • We had only one car payment instead of two, and, after paying the loan, the Prius is worth about as much on the market today as both of our Corollas would be together. One of our Corollas wasn’t paid off when we traded it, so we’ll calculate that we avoided 36 payments at $240 a month. Savings: $8,640
     
  • I estimated $1,000 a year, on average, for routine maintenance, including tires, which aren’t bought every year. Savings: $6,000
     
  • TOTAL SAVINGS: $34,441

(Individual results would of course vary. Urban parking and insurance costs are higher than for many Americans, but most Americans don’t have two cars that get 32 mpg and many would have more costs in vehicle payments than calculated here. )

Join the Discussion


Showing 11-15 of 15 comments

April 5, 2012

Everyone reading this article, including myself, is likely already quite sympathetic to the cause of saving energy. However, RMI is about rational decisions about energy costs, and i'm honestly shocked at how fiscally muddled and misleading your article is. Only the $2,709 savings from improved MPG is relevant to the switch to a Prius. Every other saving has to do with the decision to go to one car instead of two, irrespective of the kind of car.

Shame on you, Randy- we need to support our cause with real numbers, not with misleading propaganda!


April 5, 2012

Are there any numbers on the energy cost to build a Prius? How much raw materials and manufacturing costs are considered in the over all savings to a consumer? What is the cost to our environment?

Cliff Jepsen


April 7, 2012

I have a 2002 prius I bought with 1200 miles on it. I do a little over 100 miles a day six days a week year around on mostly gravel roads in Minnesota. When I bought it I figured I would save $2,000 a year on gas if it went to $1.50 a gallon. I'm saving a bit more now. It rolled over 300,000 miles this week. I figure I have more than paid for it just with gas savings.


April 9, 2012

You don't really mention that you had the cash for the deposit and the salaries to afford the monthly payments, and you don't seem to have included the interest rate incurred for borrowing money. The two things which annoy me about hybrids are that auto makers have focused on bigger more expensive cars first, going for higher margins rather than market share, and they have priced conventionally, to maximise profit, rather than seeking to maximise market share through finance-supported market penetration.


April 9, 2012

Thanks, everyone, for the comments. I'll give a nod to critics of the headline. Had it read "How Downsizing to One Car Paid for Our Prius and Put $10,000 in Our Pocket," it would have more precisely reflected what I wrote.
I wasn't seeking to sensationalize. For the six years since we traded two Corollas for one Prius, we've thought about the change as "when we brought our Prius," not "when we went from two cars to one." I think that's because, as I say, we were never inconvenienced, and we were pleased by the fuel economy we got from a car we really like.
Regarding the line items, I was transparent about how I calculated those and took steps such as downloading weekly U.S. gas prices to determine the average and calling my insurance agent in Detroit to get a quote for a second car. I used real numbers where available, such as on our mpg, which is lower (my wife blames me for that) than what many Prius owners record, and estimated below the national average in calculating avoided miles. On maintenance, it's hard to know what might have been spent on an older car we didn't actually own. I used the numbers from when the Prius got a little older and then rounded down.
It's absolutely true that the vast majority of these savings are avoided costs, as noted in the breakdown. I hope I never live so far from work again that I can't reap those benefits.
It's been fun handling our personal mobility this way, and it was fun writing this blog post and reading the comments. Thanks again.

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