Leasing the Prius

Choosing a hybrid car may be out of an unselfish desire to limit your environmental footprint. If you rack up mileage on your car, it may also make financial sense to purchase a hybrid. However, if you do not drive long distances constantly, there is little to no chance that leasing a hybrid is a viable option.

Leasing cars stops being financially reasonable for dealers around 13,000 miles per year. Occasionally, those leases do happen, but it’s not normal and would require the car to depreciate incredibly slowly. Hence, I assume that the maximum number of miles you can “take advantage of” in a lease deal to be 13,000 a year for three years.

I will compare the Toyota Prius to Toyota’s other compact, the Corolla.

Using calculators found here and here, along with the weak assumption that you’ll pay $2300 up front for either car, a Corolla would cost $257.54 and a Prius $355.26 per month. I have screen capped both results below, as the calculations will change with time.

According to consumer reports, the Corolla gets 32 MPG and the Prius 44.

We now have all of our variables except one- the price of a gallon of gas for the next 36 months. At the time I’m writing this, oil unexpectedly dropped to $3.85. Since we have all other variables, however, we can simply “solve for x” to figure out what the break even price of a gallon of gas must be for the Prius to save you money.

(13000 Miles Per Year * 3 Years) / 44 miles per gallon = 886.36 gallons of gas used with Prius

(13000 Miles Per Year * 3 Years) / 31 miles per gallon = 1258.06 gallons of gas used with Corolla

(1258.06 Gallons_Corolla – 886.26 Gallons_Prius) * Break Even Price of Gas = 36 Months * ($355.26 per month_Prius – $257.54 per month_Corolla)

371.80*Break Even Price = $3517.92

Break Even Price = $9.46

Only the most extreme Peak Oil advocate would really consider $9.46 for a gallon of gasoline to be anything but a remote possibility. There is no situation where leasing the Prius is a legitimate option for any individual American.

Of course, this isn’t exactly true since hybrid cars are subsidized to the tune of thousands of dollars. If we say that the government subsidizes the use of of a Prius at $600 per year (a low ball estimate), it means that society is spending $1800 to decrease gas usage by 372 gallons in our hypothetical above. In comparison, Americans use 1.4 trillion gallons of gas per year. Does this make sense to anyone? A year’s worth of antiretrovirals to provide treatment for someone in Africa is $92.

Considering the subsidy, it may well be worth it to lease a Prius. I just don’t feel very comfortable taking the subsidy and doing so.