Unlike classic technology “early adopters,” people who purchased Prius automobiles did not feel that they paid a premium for the privilege of owning an environmentally friendly car. While the environmental benefits were a major consideration for them, they also saw clear financial benefits from their purchase, says a new study by the Topline Strategy Group, a leading technology consulting and market intelligence firm. The study, “Why People Really Buy Hybrids,” studied Prius buyers to understand the true motivations of people who buy hybrid cars and thereby discern the hybrid industry’s future prospects in light of recently falling sales.

Segment 2: The Buyer Calculated the ROI Differently than the Experts According to our study, 16% of Prius buyers stated that the primary reason for buying the Prius was to save money on gas. Given the various analyses that show hybrids do not save enough on gas to pay for their higher purchase price, there might be a tendency to view these people as making an uninformed choice. However, while analysts present their findings as hard facts, they are in fact very much up for debate.

All analyses regarding the costs and benefits of a hybrid purchase are based on assumptions, and reasonable people can make very different
assumptions. As a result, whether or not hybrids make financial sense is very much in the eye of the beholder. That was certainly the case for James Moore, who commutes 45 miles each way to work three days a week. His 2004 Prius has over 60,000 miles on it and he plans to drive it until it wears out.

“I heard people say that the upfront costs for the Prius were too high, but I was willing to risk it. I feel the benefits outweigh the upfront costs.”

A cash flow analysis of hybrid ownership costs bears out James’ opinion and reinforces the view that reasonable people can conclude that hybrids make economic sense. . . .