| For a car that is supposed to get 60/51 mpg (city/highway), 42 is pretty bad |
The Prius' outstanding technology and efficiency notwithstanding, the fault for this lies with the EPA testing standards, not with Toyota. Toyota is compelled by law to publish the mileage determined by EPA test results, even if the test procedure doesn't account for the presence of batteries in the drivetrain. I've never met a Toyota dealer who didn't explain this to prospective buyers and lower their expectations with regard to mileage before they buy. They are very up front about it. They know the EPA test results are sky high, and they don't want to suffer the certain customer backlash for the mileage figures they are law-bound to publish.
Even so, 42 MPG is not "pretty bad" in any respect. In fact, I'd say it's excellent mileage, especially for a mid-sized sedan.
| Which puts it into the same range [mid 30s] as a whole lot of other cars out there that offer better performance for the same fuel economy. |
My 1988 CRX Si gets 32 MPG. But it's a two-seater, sub-2000-lb car. Sure, it gets great mileage, and it's a blast to drive, but I can't in any way compare it to a mid-sized sedan that gets the same or better mileage with decent performance. (Yes, I've driven a Prius. I know someone who owns one.) I don't think there's another mid-sized sedan that can touch the Prius' performance/economy ratio. Comparing apples to apples, the Prius is significantly more efficient. Just because the numbers don't match the faulty EPA figures doesn't mean the numbers are bad. 30 to 50 MPG for a mid-sized sedan is excellent mileage by any measure.
As for driving like Granny or lead-footing it, as has been pointed out earlier, the effects of such extreme driving styles will be significant in any car, not just the Prius.
(As an aside, did you all know that the Prius has no clutch and no transmission gears that mesh and un-mesh? Nothing to wear out! Cool, huh?

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[Edit: Ajay, you beat me to the punch while I was writing. Thanks for clarifying your stand on 40 MPG, and good point about needing to do the math to determine whether the extra mileage will save in the long run.]