Our Prius has been a good investment

According to the trip meter on our 2003 Prius, my wife and I have covered the last 2,200 miles at an average of 46.1 miles per gallon. That's pretty typical of the mileage we've enjoyed since buying the car five years and 62,800 miles ago.

Back then we wanted to accomplish two things. We didn't want to be part of the increasing problem of Dallas air pollution. And we wanted to declare our personal energy policy -- import less -- since our government doesn't care to have one of its own. The Wise Men in Washington are still digging a very deep hole. They remain clueless about how much weaponry our unchecked driving habits buy for terrorists.

Don't get me wrong. We're not tree huggers. And if we had to pick a neck color, it would be red. We just think health and survival are great motivation for change.

The Prius we bought was the funny-looking one, not the sleek 2004 model that has become so popular. Even so, we love it. It does our day-to-day errands very efficiently. It parks easily. And it's comfortable for the regular 600-mile trips from Santa Fe to Dallas or the 300-mile trips from Santa Fe to El Paso, with both done at 70 to 75 mph.

When I first wrote about the car, many readers sent "yes, but" notes.

• Yes, but what about the expense of the battery?

• Yes, but what about the premium you pay for the car -- will you ever recover it?

We were willing to take a chance on the battery. And at its delivered price of $20,055, we didn't see that we were paying a big premium over other small cars. We also put a value on the fact that it was quieter than most small cars, that its continuous variable transmission was smoother, and that it had climate-control air conditioning not usually found on $20,000 cars.

When we bought it, our expectation was that it would cut our gasoline consumption by about 500 gallons a year, saving us $750 a year based on the $1.50-a-gallon price of gasoline at the time. (Those were the good old days …) If gasoline prices rose to $2 a gallon, as many expected, we might save $1,000 a year.

Figuring $3.20 a gallon -- well below the current national average price of around $3.50 -- the Prius is saving us about $1,600 a year of after-tax income.

It's interesting to look at the $1,600-a-year savings in terms of what you'd have to invest to enjoy the same income. An investor in the 25 percent tax bracket buying a 10-year Treasury obligation, recently yielding 3.76 percent, would have to invest $56,738 to get the same net cash benefit.

We figure, by the way, that we saved the $3,500 cost of a replacement battery in the first 30 months or so of driving. The battery, like the rest of the car, is doing fine. So a big "yes, but" question is behind us.

The Prius, over the same 10-year period, will depreciate more than a Treasury obligation -- probably about 70 percent -- but it will also have provided actual transportation. According to autotrader.com the recent average offering price of the 49 used 2003 Priuses for sale in the entire country was $14,309. The NADA value for a clean retail car is $13,600. That's dirt cheap for five-year depreciation.

ExxonMobil shares were recently selling at $94 with a dividend of $1.40 to yield 1.49 percent. Since the dividend is taxed at 15 percent, you'd have to own 1,344 shares to get the same spendable income benefit that the Prius is now providing. That means you'd have to invest a whopping $126,386 to "produce" the income benefit of a 2003 Prius. As energy guru Amory Lovins has pointed out relentlessly since 1973, the cheapest way to produce more energy is to use it more efficiently. Sounds like a plan to me.

Which brings me to the future.

There have been rumors that the 2009 Prius will be a plug-in car with enough battery power for short commutes. Instead of refilling the gas tank, drivers will recharge the car at night, reserving the gasoline motor for highway trips. Problems with the development of more powerful batteries, however, appear to have delayed the plug-in and its potential to achieve 100 mpg.

A car like that … well, it could get us to think trade-in.

© 2008, Universal Press Syndicate