Toyota Prius Is First Hybrid Vehicle Certified By IRS for $2,000 Tax Deduction

WASHINGTON, Aug. 12 -- The Toyota Prius is the first hybrid electric-gasoline automobile to be certified by the United States Internal Revenue Service as eligible for a $2,000 clean-burning fuel tax deduction.

In a July 26, 2002 letter to Toyota the IRS said, "We have determined that a purchaser of this hybrid vehicle may rely on the certification concerning the incremental cost of permitting the use of electricity to propel the vehicle."

"This documentation confirms Toyota's stance that the Toyota Prius, Model Years 2001, 2002 and 2003, qualifies for the full $2,000 tax deduction available to individual consumer purchasers," said Jim Press, executive vice president and chief operating officer of Toyota Motor Sales, U.S.A., Inc. "Toyota Prius purchasers can use or take this certification to their individual tax advisors to determine how they can take advantage of this important federal tax benefit."

The IRS has requested that the consumer purchaser, in addition to retaining normal proof of purchase documentation, retain the Toyota and IRS correspondence as further substantiation for the Prius federal tax deduction. Purchasers can get copies of this correspondence from their Toyota dealers.

As automakers rush to bring more environmentally responsible products to market, one thing is clear. Not all hybrid-electric vehicles are created equal.

For example, the Toyota Prius has the lowest emissions level of any hybrid sedan on the market and that's good news for the environment. Prius is certified as a Super Ultra Low Emissions Vehicle (SULEV), whereas ULEV certification allows 10 times the smog forming emissions. The only thing cleaner is an all-electric Zero Emissions Vehicle.

Hybrid vehicles, developed in the last few years, combine a small gasoline engine and an efficient electric motor that operate alternately or in concert to achieve reduced emissions and increased fuel economy. Contrary to conventional wisdom, they never have to be plugged in because the batteries are charged automatically when the gas engine is running.

Other available hybrids use the electric motor only to assist the conventional gasoline engine. In the Prius, however, not only does the electric motor assist the gasoline engine, it is also capable of powering the car with the gasoline engine off. "We see hybrid vehicles as a step to the future, when more advanced technologies such as fuel cells will be ready for the mass market," said Press. "That's why Toyota is working on a wide range of vehicles with this technology."

Prius is the world's first mass-produced hybrid-electric vehicle and since it went on sale in 1997, close to 100,000 have been sold worldwide. American consumers have purchased nearly 30,000, outselling its nearest competitor by a margin of three to one. Worldwide, Toyota accounts for 90 percent of the hybrid vehicle market.

Toyota engineers were able to achieve SULEV certification for the Prius by integrating a technologically advanced hybrid power system with a state-of- the-art exhaust system. The primary power source for Prius is an all-aluminum 70-horsepower four-cylinder engine. It utilizes variable valve timing to maximize efficiency. The 44-horsepower electric drive motor features a reliable design that requires no maintenance because its internal components never wear.

For a further reduction of harmful gases, Prius is equipped with a unique exhaust system that absorbs hydrocarbons emitted when the engine is started and the catalytic converter is still cold. After the catalyst has a chance to warm up, the hydrocarbons are slowly purified.

In addition to a superior emissions rating, Toyota engineers were able to provide excellent fuel economy. This environmentally sensitive combination of performance is another thing that gives Prius an edge over the competition. It has an EPA estimated mileage rating of 52 mpg in the city, 45 mpg on the highway and 48 mpg combined.

The key component for coordinating low emissions and high mileage is the proprietary Toyota Hybrid System, which lets Prius operate on either electricity, gasoline or a combination of both. No competitive hybrid vehicle can achieve this level of powertrain versatility.

The ratio of power provided by each system is constantly controlled, depending on speed and load, to ensure the vehicle operates at peak efficiency. When Prius stops, for example, its engine shuts off to eliminate wasteful idling. The car then starts up on the electric motor, and the engine restarts automatically when more power is needed.

The Toyota Hybrid System is seamless and virtually unnoticed when changes occur in the power source. For this smooth-driving transition, Prius has what engineers call a "split-power device." It uses a planetary gear connected to the motor, generator and engine to deliver power to the front wheels.

All of this advanced technology is wrapped up in a package that makes Prius a sensible everyday car with traditional Toyota quality. It tied with the Toyota Corolla as the highest-ranking car in the compact segment in the recent J.D. Power Initial Quality Survey.

The aerodynamic four-door was styled by Toyota's design studio in Newport Beach, Calif. Inside, there's excellent visibility and seating for five. A roomy trunk can accommodate anything from groceries to luggage.