The Prius has been called a true hybrid vehicle, designed from the bottom up. Toyota's goal for the Prius was to reduce the amount of pollutants it produced and to be as energy-efficient as possible. They used several methods to try to achieve this goal, including:
More efficient use of the internal combustion engine (ICE), reducing gasoline consumption. The Toyota 1NZ-FXE engine uses the more efficient Atkinson cycle instead of the more common Otto cycle;
Two electric motor/generators, providing 50 kW (67 hp) @ 1,200 to 1,540 rpm and 400 N·m (295 ft·lbf) torque from 0 to 1,200 rpm, which significantly contribute to performance & economy;
50 kW IGBT inverter controlled by a 32 bit microprocessor, which efficiently converts power between the batteries and the motor/generators.
Lower Drag coefficient of drag at 0.26 (0.29 for 2000 model), reducing air resistance especially at higher speeds;
Lower rolling-resistance tires on the 2000 model, reducing road friction;
Regenerative braking, a process for recovering kinetic energy when braking or traveling down a slope and storing it as electrical energy in the traction battery for later use while reducing wear and tear on the brake pads;
Sealed 168 cell nickel metal hydride (NiMH) rechargeable battery providing 201.6 volts;
Continuously variable transmission — the Prius does not use a typical CVT; Toyota calls it the Power Split Device. The electric motors and gas engine are connected to a planetary gear set which is always engaged, and there is no shifting.
Flexible resin gas tank, reducing the amount of hydrocarbon emissions in the form of escaped gasoline vapor;
Vacuum flask coolant storage system that stores hot engine coolant, then reuses it to reduce warm-up time.
Weight reduction — for example the hatch and hood are made of aluminium instead of steel.
Touted advantages of the Prius over previous energy-efficient designs include never needing to be plugged in, as all power is ultimately delivered from the gasoline engine. This means it drives like a traditional ICE automobile, with the onboard computer taking care of shifting power to and from the engine and motors, and automatically determining when to charge the battery, as well as the most efficient use of the engine or the electric motors (or both) based on driving conditions. This also means that one can not choose to use electricity from other sources to power this vehicle; some consider this to be serious disadvantage. The Prius uses energy that would be otherwise wasted: i.e. when braking, the kinetic energy is partly recovered to recharge the battery instead of being wasted as heat and brake wear.
The engine is permitted to shut down once it has warmed up and the catalytic converter in the exhaust system has reached operating temperature. Once this occurs, the Prius can be driven on electric power only; this is sometimes referred to as "stealth mode" due to the lack of engine noise. This further reduces gasoline consumption and wear and tear on the engine. When driving conditions demand additional power from the engine, it is designed to start up automatically.
As well as the immediate benefit of reducing fuel consumption and emissions, stopping the engine also improves the performance of the catalytic converter, as in a normal vehicle the exhaust gases from an idling engine tend to cool the catalysts below their optimal temperature.
Frequent starting up and shutting down of the engine does not cause additional wear and tear nor emission problems, as in conventional automobiles, because the drive motors have enough power to quickly and smoothly spin the engine to optimal rpm (around 1,000) before the engine actually begins to "fire up". This avoids wear when the engine is "running" (with fuel and spark) at very low rpm, as happens in most vehicles.
The Prius gets better fuel efficiency in the city because the batteries get used more, whereas on the highway, the engine is used in order to recharge the batteries, and the wind resistance is higher.