Prius vs Corolla – Which Makes More Economic Sense?
Jason Lancaster | Jan 23, 2012 | Comments 13
A frequent commenter here on TundraHeadquarters.com (shout out to mk) posited an interesting thought: It makes more economic sense to buy a new Toyota Corolla than it does to buy a new Prius, because it would take years of driving and gas savings to recover the cost difference between the two.
Said another way, the $5500 price difference between the Prius and the Corolla buys a lot of gas. Right?
While I was completely inclined to agree with this idea, I decided it might be fun to run the numbers. Here’s how I broke things down.
First, let’s make a few assumptions:
- We’re financing whatever we buy with no money down
- We’re buying gas for $4 a gallon
- We’re actually going to get the EPA’s “combined mileage” figure when we drive each vehicle
- We’re going to assume the vehicles are driven 15,000 miles a year
Next, we’re going to try and compare two cars that are as apples-to-apples as possible. That means that the Corolla with the 5-speed manual is off the table. While this gives the Prius a bit of an advantage – the manual transmission Corolla gets slightly better gas mileage – the fact is that manual transmissions aren’t nearly as popular as automatics.
In terms of fuel economy, the EPA says that a 2011 Prius gets 50 mpg (combined) and that a 2011 Corolla with an automatic gets 29 mpg (combined).
Prius vs Corolla - Fuel Economy
Next, here’s how the features break down:
| Feature | Prius 2 | Corolla LE |
| LED tailights | X | – |
| Alloy Wheels | X | – |
| Front, Side, and Curtain Airbags? | X | X |
| Driver’s Knee Airbag | X | – |
| Touch Trace Display | X | – |
| A/C, CD Player, Tilt, Cruise, Power Windows and Power Locks with keyless | X | X |
As you can see, a base model Prius Two has roughly the same level of luxury and refinement as a Corolla LE, assuming we don’t add any options to either vehicle.
Last, let’s look at price:
As you can see, a Prius Two is just about $5,500 more than a 2012 Corolla LE.
Finally, some math:
- Our Prius needs 300 gallons of gas to drive 15,000 miles. At $4 per gallon, the annual fuel cost of our Prius is $1200.
- Our Corolla needs 517.24 gallons of gas to drive 15,000 miles. At $4 per gallon, the annual fuel cost of our Corolla is $2,069.
- Based on our assumptions, our Prius will save us $869 a year in gas. After 6.3 years, we’ll earn back the cost premium of our Prius.
6.3 years to break even? Seems like a long time considering that most people keep their cars 4-5 years… and what about financing?
- If we finance our $24,280 Prius over 5 years, Toyota Financial will give us 3.93% APR with excellent credit. That’s a total finance charge for the Prius of $2,540.
- If we finance our $18,670 Corolla over 5 years, Toyota will give us a special 2.9% APR, and our credit doesn’t have to be perfect to get it. That’s a total finance charge for the Corolla of $1,408.40.
The extra finance charges – about $1100 – add more than a year to our break even time line.
So, why buy a Prius?
We know that, economically speaking, it probably makes more sense to buy a Corolla instead of a Prius, as it will take years to “earn back” the additional cost of the Prius in fuel savings. However, that doesn’t mean that there aren’t some good reasons to buy a Prius:
- It’s (arguably) better for the environment and U.S. energy security because it burns less gas
- It’s cooler than a Corolla – at least in some circles
- The Prius has more safety features
- You’re planning that gas prices will go up above our $4/gallon estimate (and stay there for a long time)
- You plan to drive the Prius until the battery pack fails (about 150k miles, give or take)
Bottom Line: There’s economic value in buying the Prius, but it takes a very long time to see it. If you’re buying a Prius over a Corolla, you want to make sure you’re doing it for the right reasons – it’s not exactly going to save you money anytime soon.
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Interesting comparison. In Sept. of 2010 I bought a Prius for my wife. At that time, we only paid about a 3K premium over a comparably equipped Corolla. She does about 20K a year, so doing the math it looks like our break even point is a little over 2 years. The Prius also has more features than the Corolla, and more interior room, especially in the back seat. One other important fact surprisingly not mentioned in the article is resale value. After 4 years a Prius will retain 15% more of its original purchase price that the Corolla. When that is factored in, the Prius is a much better value than the Corolla.
disagree somewhat tonyspin. We just recently traded in our 2009 corolla for 13K bought new for 16K, only lost 3K in 2 1/2 years of driving, great resale as well. Also, our avg. fuel economy over 2 1/2 years was 35 mpg, not 29 mpg and our neighbor who owns a prius says his avg. mpg is 45-46 mpg since we both drive 80% hwy. miles and we all know the prius is better in town mpg than hwy. vs. the corolla is better hwy. vs. city driving. Also, I would anyday rather be in an accident in a corolla over a prius thus the corolla is just as safe as the prius. A prius cooler looking than a corolla, I think not. Also, the front seats in a prius as a commuter car are not even close in size to the front seats in a corolla, trust me I sat in my neighbors drivers seat for a prius vs. our corolla, and much smaller/skinnier in the prius front seats. My calculations are closer to 8 years to re-coupe the extra money spent to buy a prius over a corolla. Plus, a prius in the wintertime here in WI my neighbor totally dislikes since has no ground clearance and has no power whatsoever. I once got a rental prius and the front bumper was froze to the icy snowbank. The engine did not have enough power to break away from the icy snowbank, no kidding, what a joke.
Read something similar a few years ago against a 1996 Ford Taurus and a new Prius weather you actually save money or not by buying a Prius. The Taurus did get worse gas mileage but was only about 3k to buy. When they compared how long the Prius would take to break even with the Taurus and start saving you money it was like 25 years. Kinda funny
The resale value I quoted was for 4 years, and those are KBB figures, not mine. As far as gas mileage, the biggest factor there is the driver. Some Prius owners on Prius forums I frequent report mileage numbers in the upper fifties. My wife gets about 51-52 in the summer and 45-46 on winter gas on her 90% highway commute. Bottom line is this: before this year is over, we will have made up the premium we paid for the Prius over the Corolla in gas savings. If we keep the car another year and a half after that, we will have saved another $2000 in gas. If trade it in then, I will recoup the difference I paid over the Corolla. You say you would rather be in an accident in a Corolla than a Prius. I personally would rather be in the Prius. One reason is the Prius is heavier. Another reason is that my knees will be protected by the knee air bags that the Corolla doesn’t have. As far as interior room, The Prius has more than the Corolla, especially the back seat. It has almost as much as my Camry. I rented a Corolla in Vegas last year and drove it to the Grand Canyon. My wife and I agreed that similar length trips in the Prius are much more comfortable. To each his own, but if I could do it over I would buy the Prius again.
Your right, to each their own and I will leave it at that.
My prius neighbor is wanting to buy a new Nissan Juke cost 23K out the door turbo charged 4 cylinder requiring 91 octane gas to run effectively and is one of the smallest hatchbacks in the bunch ONLY going to get 28 mpg tops and guessing 26-27 avg. mpg. Like I said, to each their own. He seems to want my approval, but I tell him if he likes it, so be it, but I wouldn’t ever buy it myself.
tonyspin – You are correct – I didn’t look at resale. That definitely impacts the math…honestly, I didn’t bother because I assumed their residuals would be very close, but also because resale presumes that we’re not going to keep these cars forever (even though, financially speaking, keeping a car as long as possible is the most responsible thing to do).
A quick check of the Cars.com residual value tool for 2011 shows that the Prius residual is 2-3% of the initial MSRP higher than the Corolla over 36 or 48 months. At 60 months, however, the Corolla is 1% of the initial MSRP higher than the Prius.
In terms of real-world numbers, this means a 3 or 4 year old Prius 2 will bring $3000-$3500 more than a Corolla LE with similar miles, etc. At 5 years, that differential falls to about $2500.
SO, that pulls 2-3 years off the break-even point…assuming we trade it in.
You also make a good point about backseat room.
mk – Hybrids definitely aren’t ideal for cold weather climates – and as a result they may no be worth the hassle at any cost when the weather’s cold.
I also agree that the earn-back numbers are subject to local market conditions. If, for example, you live in a place where cold weather and/or extensive highways make the Prius less fuel efficient, the math changes.
Thank you both for commenting.
Jason, I agree with all your points, especially about cold weather climates. I would also like to point out that the resale figures I posted were from KBB and were for 2007 and 2011 models of both vehicles. Economic issues aside, the big factor for me was safety. Even though the Prius is only marginally safer because of the extra airbag and vehicle weight, it could mean the difference between serious injuries and minor injuries.
both are good cars in their own right, prius just not for me and where I live and how I drive. Just curious, but has a lot of prius owners achieved over 150K miles without having to replace the batteries costing guessing like 3-4K in cost and labor? I think the batteries are expected to last 150K, but in real world driving, is that true or are more and more batteries in the prius being replaced closer to the 100K mark? Reason I ask is my prius neighbor has 100K on his prius and is re-thinking keeping it much longer due to the cost of batteries being as much if not more than a full regular gas engine to replace.
On the Prius forums I frequent there are threads for 200,000 mile clubs and 300,000 mile clubs, and many members. I remember one member that had 180,000 on his gen III Prius and was still going strong on the original battery. Batteries can be replaced for less than $2000. Tell your neighbor to join a Prius forum and read about his vehicle. At 100,000 miles, that car is just getting broken in.
tonyspin – Good point about safety too.
mk – To my knowledge, most batteries last *at least* 150k, with many going 200k+. Of course, that’s just a guess when it comes to the pack in any specific Prius. No guarantees. 😉
Also, based on a quick conversation with my friendly local Toyota service manager, you can get a new battery pack in for about $2k.
Agree Tony. The wife gets in the 50’s mpg. If she decides to do 55mph then her mpg’s are in the 60’s. She’s at 92,345 miles. She has an 07 Pkg6. Still on original pads and rotors. Only thing changed was the HID bulbs in both headlights and a set of wiper blades.
Try running the numbers again versus a Fiesta. It’s about $1000 cheaper than the corolla similarly equipt and should do 34mpg combined.
You completely forgot insurance costs.
Rangie – Good point and good idea, but I don’t see how I’ll have time to work it in…but I’ll try! 😉