Study Shatters Myth of Hybrid Premium

A new study of 118 Prius drivers, recruited mostly through flyers placed on their windshield, shatters the conventional wisdom that hybrids do not pay for themselves. Most of the Prius shoppers wanted an eco-friendly car. But when asked what kind of car they would have purchased if they had not bought a hybrid, these shoppers would have purchased a vehicle costing thousands of dollars more than a Prius. Therefore, the Prius was not only their most desired vehicle; it was cheaper than other cars on their shopping list.

“This study captured the people that traded down from a luxury vehicle, such as Audi A6, BMW X3 or Acura TL,” said Jonathan Klein, general partner of the Topline Strategy Group, the Boston-based business and technology strategy firm which conducted the study. In an interview for, Klein said today’s hybrid buyers “could be considered the second wave of the hybrid market.” The first group of hybrid buyers, considered early adopters, was motivated by a desire to reduce their environmental impact or buy their fascination with new technology.

“Our study also captured the front end of the third wave, consumers who are buying a hybrid just because it’s a better financial option,” said Klein. Most of the respondents used longer periods of ownership and higher gas prices than usually used by journalists. As a result, the shoppers found hybrids to be a compelling financial transaction.

Klein believes that the demographics of Prius buyers in his study are indicative of the broader hybrid market:

  • 71 percent of respondents earned more than $100,000 per year.
  • 73 percent were 40 years or older.
  • 58 percent were men.
  • 88 percent were “very happy” with their Prius; 12 percent were “somewhat happy.”

The changes in the market reflect a move “from green to practical,” according to Klein. He believes that hybrid market will expand rapidly, regardless of gas prices, to a point when consumers will more casually choose a hybrid “because it’s a better option” without much consideration of hybrids as new technology or better for the environment. Klein views hybrids as a “real disruptive technology making its debut in automotive” and considers hybrids a critical market advantage for Toyota. He said, “When it all settles, and most carmakers have their hybrids, Toyota will have made their gain from 17 to 22 percent of the market.”

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  • James M

    I’m a car guy. Always have been. But at what cost? I had to come to grips with the fact that we Americans are funding record profits for the oil companies. These same companies claim they have ” shortages” but facts say this is absolute falsehood.

    In the past, I’ve always admired cars that performed at the top of their field in speed, performance and antiquity. Today, I’ve decided it’s OK to keep the classic in the garage for a Sunny Sunday cruise. I’ll use the latest, best technology available to me as my daily driver ( I’ll purchase cars with lithium battery packs and plug-in capability, or a clean deisel when they arrive ). This allows me to tell the countrys who hate us deeply yet take our money for crude that I’ve kicked the oil addiction and have grown some sense of the big picture.

  • domboy

    118 seems like a rather small sample…

  • Jonathan Klein

    118 responses is more than enough for a statistically significant sample, especially for a one time study where we did not cross cut the data. When you see surveys with 1,000 or more responses, there are two reasons they have so many.
    First, they repeat the survey over time and need a very narrow confidence interval to project trends from survey to survey. Second, they crosscut the data into subsegments such as “male democrats over 65.” After they isolate that subsegment, their samples can be a lot smaller than 118.

  • Richard

    Great job marketing to the false outrage crowd toyota.
    shifting there desires from tank like SUV safety to green statement making.
    Glad I bought the stock.

  • louis loibl

    It’s not really much comfort to know that folks who could afford a more expensive vehicle are enjoying their prius,s. How about the rest of us?

  • Indigo

    Finally! A study that didn’t try to compare the cost of a Prius to that of an Aevo!

  • Scottypotty

    If you’re reading on this site, you’re probobly a hybrid car lover, as I am. This can sometimes disallow us to question what we already believe to be true. This study hardly proves anything. The sample is based on voluntary response. To come to any conclusions such as “Shatters myth” is concerning. Take this article with a grain of salt.

  • michael a.

    I read somewhere that hybrid owners have the highest satisfaction rates of any type of car owner.

    If this is true, then the idea that there is a “premium” seems silly. If there were such a “premium” many hybrid owners would have “buyers remorse” which are feelings of regret for having paid too much for something.

    The “premium” does not exist – hybrid owners get excellent value for their money.

  • richard

    The comparison also never acts as though the $3,000 battery is actually worth something.
    Last study I saw, showed Prius amongst the top in resale value already.

  • Robin G.

    I get 45 MPG with my 2005 Prius. Whenever I tell folks that many reply, “Well this other car is rated at 40 MPG and costs less.” I say that my Prius is rated at 60MPG and gets 45MPG – what kind of mileage do you think that other car really gets — plus it uses premium fuel. I am not anywhere near being an environmentalist – I just don’t like sending a lot of my hard earned money to countries that use my money to support terrorism!

  • starbrite

    I’ve been wanting a hybrid ever since the Insight first came out on the market. Alas, even today I don’t make nearly enough to finance one of these green go-machines, and that makes me sad. I continue to drive my 10-year-old Civic, because it’s still working, and it’s completely paid for. I know that in time, as hybrids become more mainstream (and it’ll take a while), prices will come down, and my salary will go up. Still, I wish I could afford one now, especially with all the driving I do (I commute an hour each way between work and home).

  • Travis

    So, the rich (ones who want fancy cars) saved money by buying a hybrid….how trendy.

  • Gary

    Edmunds says that the average price of a new car is $28K.

    It would be very hard to spend that much on a Prius — ours was $22K.
    (not counting the tax credit)

  • Mike C.

    This article seems to be a bit flawed in its logic. I have two things to say:
    First, the premium argument from an accounting (strictly cost-based) perspective is that hybrids are not a good deal. And on paper, this is true, they aren’t: it would take years and years of fuel savings to recover the added cost (technology premium) of hybrids over straight gasoline engines for *comparably* equipped models (i.e. Honda Civic Hybrid vs. Honda Civic LX or EX). Economically speaking however, hybrids COULD be a good deal depending on the tastes/preferences of the individual consumer. It’s hard to place a value (aka price) on one person’s concern for the environment (aka utility), or on the trendiness factor, something which accounting completely ignores.
    Second, just because “Edmunds says that the average price of a new car is $28K” doesn’t mean you saved money on your $22K Prius. I’m willing to bet the ‘average price of a new car’ is a very biased measurement of central tendency due to the fact that the cheapest car around is probably around $10k, whereas the most expensive cars are 6 and 7 figures. Graphically, if you plotted yearly new car sales volume vs. avg. new car sales price, you’d get skewed a bell curve with a lonnng right tail, which means the mean (avg.) is way above the median.
    Furthermore, the Prius is not the only model out there, so comparing it to the average tells you nothing. The best comparison would be to figure out the MEDIAN price for a range of COMPARABLE vehicles.
    Any comments?

  • atpcliff

    I priced a Prius at my local Wisconsin dealer about a year ago. With the trim level and options I wanted, it was $34,000.

  • GeoW

    To (miss?) quote Andrew Lang the Scottish poet and linguist: “Researchers use statistics the way a drunkard uses a lamp post – more for support than illumination.”. 😉

  • eric

    i want to know what flux capacitor and wings you put on your prius for $34,000. my prius tricked out with the option 6 package is only 27k

  • Ellie

    I just bought a touring prius with xm radio for 24500 before tax and title.

  • Nate

    When we bought out Hybrid where weren’t looking at the years after buying it to save money, we looked at our monthly expenses. We traded our Trailblazer XLT in for our Hybrid. So here is some simple math that told us we were saving money.
    Trailblazer monthly payment: $436/month
    Gasoline for SUV: $400/month(roughly $100/week)
    Total: $836/month
    Our new Prius:$466/month
    Gas: $70/month (roughly $35 week 1/2, full tank gets around 520 miles)
    Total: $536/month
    Savings:$300/month est.
    Full coverage of all parts of Hybrid (stndrd 8yr/100k for all Hybrid components)
    We have money coming back in our pocket and maint. on the Prius is like any other car, fluids/breaks/tires/etc are all changed same time as all gasoline cars are, for the same price.

    What are these “added” costs of Hybrids you speak of?

  • Armand

    They are still too expensive. Just because you make over $100K per year doesn’t mean you want to send $500/m+ for a car does it?

    Where are the Hybrid Fits? Yaris? Punto? Polo? Etc???

  • Chris G

    I started my Prius lease in February and love it. I drive a truck for a living (gasp!) and have noticed that I am driving my work truck differently. Maybe it is from “re-learning” to drive my Prius. Seeing what can happen to your average MPG with full throttle acceleration makes you realize most people driving like idiots (full throttle, not leaving space between cars in front, or slamming on brakes constantly) robs your pocket in wasted gas. Coasting, slowing down, and just good old defensive driving go a long way in saving fuel. My Prius has taught me that Driver Ed teachers knew what they were talking about. Let’s all be a little more considerate of one another on the road and save gas at the same time.

  • DaveBaldwin

    This is a useless comment – whether they are rich are not doesn’t matter, the fact is that they are making good choices environmentally, and arguably ‘better’ choices financially.

  • Abner

    You are guaranteed to save money with a hybrid car: If you are doing town driving, you may save fuel and you may not. The same goes for motorway driving. There are just too many different factors involved.
    Hybrid Car Myths
    Great read, Thanks.

  • Hybrid Newbie

    I recently purchased a ’11 Camry Hybrid because I think gas prices will rise quickly in the foreseeable future. Oil prices are up, and if the growth in world population does not let up, there will be more people competing for finite amounts of fuel. If people in this country want to maintain their driving standard (ie, driving anywhere they wish without much concern about fuel prices), high-MPG hybrids are the only way to go. This is a preparation for the future. The electric car will still be ‘impractical’, due to the long re-charge times and short driving ranges of current models.

  • Homer

    Our American economy is founded on waste: mcmansions surrounded by nothing but more mcmansions. To buy a loaf of bread, we must get into a car. Few of us commute to work via mass transit (most of us live in towns and cities that do not provide clearn, cheap, fast public transportation). If we are serious about freeing ourselves from spending money to finance terrorists, we need to rethink our infrastructure.

    That said, my next car will be a hybrid. I am thinking Insight.

    Thanks to those who have made informative comments.

  • Steve623

    Reading this really makes me sad as it perfectly illustrates our idiocy and consumerism as a nation.

    For starters, if one is truly worried about saving money then maybe you have no business buying a new car. Instead of buying a 2011 Toyota Prius for $24,000, buy a low mileage 199X Civic (or comparable) for about $3000. Spend about a grand on touch-up, a killer stereo, some rims, whatever. OMG! Cheap insurance, easy maintenance, low repair costs and no monthly payments. That $20,000 dollar premium is what all the idiots pay because they think gas prices are so high that they NEED a hybrid.

    OK, so let’s say that you are so wealthy that gas prices are of no consequence and you really just want to reduce your carbon footprint, or whatever. Buy that used Civic. It’s called recycling! That’s one unloved vehicle potentially saved from an ignominious end in a landfill, and one less new car built. I dunno what energy costs and materials go into making a new car, let alone a hybrid, but by buying that old econo-box you are not contributing to the destruction of mother Gaia!

    Then there’s the third, and most common reason for buying a hybrid: you can look down your nose at your neighbors because they are sooo less educated and responsible than you are. Well, I can’t help you there, no other vehicle on the planet does as good a job of making you look like a pretentious D-bag. So enjoy your hybrid!

  • tapra1

    of hybrids as new technology or better for the environment. Klein views hybrids as a “real disruptive technology making its debutTop Business Hosting