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Does installing a new Prius battery increase the value of the car?

I’m considering buying a 2001 Prius from a friend. He put a new battery in the car two years ago and my friend thinks that the value of the battery should be added on to the Kelly Blue Book value of the car. But I was under the impression that this is considered maintenance and is already accounted for in the KBB price.

If the Kelly Blue Book value is about $5,500 - $6,000 and he paid $2,800 for the battery in 2010, how much does this change the value of the car?

He thinks we could depreciate the value of the battery in half (so, $1,400) and add that to the price of the car, putting it at $7,400.

It makes no difference what you call it.  When you are looking at used cars, you should factor in the OEM cost, age, miles etc…..  

However that is only meaningful to you.  There is no magic number or formula to come up with a correct price.  It all depends on what the seller and buyer agree on.  What someone else paid for a like car is what the market price was at the exact moment of signing the deal. 

It is all about the willing buyer and willing seller.  The second after you make the deal (generally when you drive off the lot) it is a new ball game with someone else looking at what you paid and trying to convince the next buyer that a different price.  

How much a like car was sold for 10 minutes ago is old news.  

There is no formula that will give you the "right" price.

I don’t think putting a new power battery in a Prius increases its value even by ten cents. You expect the battery to be good when you buy the car. The same is true with a used car that has had a new engine installed. The new engine doesn’t increase the value–you expect the car to have a working engine.

I agree.
For instance, with a conventional car that has a timing belt, if you buy it with 100K on the odometer, the first question asked should be “When was the timing belt changed?”.
If it was done at the regular suggested interval, it is likely considered “well taken care of”. It doesn’t add to the price but if it hasn’t been done, it will detract from it.

It is probably the same if the battery hasn’t been changed on Prius.

How many miles on the Prius? What value are you looking at, Private Party? What condition? If you assume Excellent or Good condition, then I wouldn’t pay anything “extra” for the 2 year old battery. Any Prius with an 11 year old battery shouldn’t be considered Excellent condition, since these expensive batteries don’t last as long as the rest of the car.

I generally try to avoid doing any financial business with friends. What’ll happen if you buy this car and it dies on you in 3 months? If you want to stay friends, don’t do business with each other, especially if the other person is going to try to negotiate you into a premium price.

I don’t think it should increase the value of the car by $2800, but I agree with your friend that it does increase the value of the car by some amount as you should not have to replace it again for at least a couple of years. Had the battery been replaced before the one that’s in it now? It is a 12 model year old car. I don’t know how long those batteries are expected to last. Even if it is halfway through its life expectancy, I do think some allowance is in order, but probably not $1400. Maybe $1000.

Replacing the engine in a car with a NEW or newly well rebuilt engine definitely increases the value of the car. Replacing it with a used one of similar mileage will not. One expects a used car to have a working engine, but a NEW engine or transmission is a plus. Those can equal the value of the car in some cases. BTDT lots of times.

I agree with MG, this is a major repair, like a new engine or transmission, and addresses the main issue folks worry about with an older hybrid. The amount is negotiable, he started at $1400, it’d certainly be worth $1000 to me. As long as you’re certain you like the 1st gen Prius, and will hold nothing against your friend if something major fails the week after you buy it. I don’t like buying from friends for that reason.

I can tell you from a dealer point of view it makes no differance. Lets say a car with bad AC comes in to be traded in, we dont ADD to the price if the AC is new, but we will deduct from the price if the AC is bad. Same with a Timing Belt, its not an ADD that it has been done, but it is a demerit if it has not been done. I think the battery is the same way, if he replaced it then I am guessing there was an issue with the old battery. So that would have been a deduct if you purchased it then, now that its fixed its not an add… The car is just worth what its worth, and not less.

Thank you all for the feedback!

To answer some of your questions:

– I think the actual condition is “good”, but I’d be happy to bump it up to excellent considering the new battery.

– My friend replaced the battery because the old one was not functioning properly.

– I’ve been borrowing the car for a little over a year (while he’s been out of the country). When he loaned it to me, it had 68,000 miles on it. It now has 93,000. But when I input the mileage to KBB, I’m using 68K since that’s what it was when I started using it.

I posed the same question to KBB online and got the following response from their customer service:

“The KBB value is dependent on the market and what the market says that particular value for that year is. However, with the cost of a new battery would change the condition of the vehicle (if not replaced), because this vehicle would need mechanical work in order to get it up and running.”

… I think that means essentially what “gsragtop” said above, but I’m not completely sure.

That is one expensive used car.

It adds no value.

Are you buying this car out of obligation to your friend, or because you feel you’re getting good transportation at a reasonable price?

Will your friendship be the same if, soon after you buy it, it needs an expensive repair?

$6000-$7400 is a lot to pay for a 12 year old vehicle like that.

First , take the car to a Toyota dealer and have it appraised. The dealer will know how to value the replacement battery. Agree with your friend that you will determine the sale price based on the appraised value.

Second, it is one thing to keep an eye on a friend’s car while he is out of the country, something of value to him. It is another to put 30K miles on your friend’s car, a substantial value to you. IMO you owe your friend something for that use. Using an online calculator, or the dealer, determine the difference in value between 68K and 98K. Decide what part of the depreciation due to mileage is your responsibility.

If you like the car and want to buy it by all means do. If you don’t, be prepared to cut your friend a check for your use of the car.

Flip the coin over. How much would the car be worth with a dead battery?? Answer: About $350 dollars…Friends should never buy or sell cars amongst themselves…

If I decide not to buy the car, I will compensate my friend for the depreciation of the car while it’s been in my use and I’ll help him sell it, since he’s still abroad. That’s all beside the point, though.

I want to give my friend a fair price for the car, but I’m also not sure what that fair price is. That’s why I’m looking for some neutral parties’ opinions about this battery issue.

You’ve been using the car for a year and you put 30K miles on the car in that year. How have you compensated your friend the one year of use and the 30K miles? If the answer is you haven’t given him anything, then I think you should buy the car at the full value your friend wants.

The IRS deduction per mile something near $.50 a mile. If you paid for gas, tires, and maintenance less say that goes down to $.25 a mile. Multiply that by 30K miles and you’d owe him $7,500 for the use of the car.

You had a free car for a year, no time to “cheap” now.

I appreciate your comment, but this is unrelated to my question.

As I just said, if I don’t buy the car, I will pay him for the depreciation of the car. (Depreciation can be calculated using KBB, not IRS deductions). Plus, I would give him an additional monthly rent, as was our agreement. I have also maintained the car, put new tires on it, etc. I would also help him sell the car.

I understand it’s a complicated situation, but if we could please stay on topic – about the battery – that’s what I’m more interested in. My friend and I have already worked out an agreement for what will happen if I don’t buy the car.

A brand new transmission or engine are never seen as an added value to a used vehicle EVER.

A similar point can be raised for a Prius/battery.

It is a very expensive car to fix as parts are dealer only or salvage.

Common failures are transaxle, inverter, traction battery, and Multi-Function Display. A coworker is finally over hers after replacing all but the battery to get 40MPG.

Using 68,000 for miles and the Excellent Condition value seems more than fair. This price already reflects the fact that it doesn’t have an extremely old battery pack. This price is good for the seller too, it’s more than anybody else would pay him/her.

The battery replacement was just a necessary repair. If it hadn’t been replaced, the car would have been worth at least $2,800 less than the prices KBB is now quoting.

No 93k miles, 12 year old should be considered as falling in the “excellent” range as to condition unless it was warehoused with 3 miles on it and even that’s iffy.
I think the car is overpriced and your friend is placing too much value on a used battery also.

About a dozen years ago some guy in Oklahoma City had a 1981 Buick Regal for sale and he wanted 11 grand for that 1500 dollar at best car. The reasoning was that he had well over 8500 dollars in sterero equipment tucked into it. It matters not; the car was worth 1500 dollars and even offering half of the asking price is pure insanity.

I’m seeing the general consensus here is that you should probably not figure the new battery into your buying price, if all things were equal. Now, not all things are equal, so if this were me, I’d let him think I was paying more for the “battery,” but I’d be paying more for “extreme generosity.” I may not pay his asking price, but I WOULD do more than KBB. In the end, as long as the money works out between the two of you, do you really care what EXACTLY he’s thinking you paid for?

To further highlight what a few people have already said, buying from friends (or family) can be a risky undertaking. Now, if your friendship survives through an inevitable getting rid of the car (for one reason or another - and whether that’s next month or in 20 years), that’s great. It can get sour, though, so be prepared.

However, since you’ve already gone into negotiating with him, you’re in a bad place. Ethically, to your friend, you can’t really do much to back out of the deal.

Good luck.