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Our 2007 Gen. 2 Prius was going out of warranty and we've been looking at the Gen. 3 Prius for a while, so Thursday we took the plunge and traded for a 2010 Prius IV. The current incentives of $750 cash back plus two years of free scheduled maintenance helped us decide. (These incentives expire Monday, May 3rd.)

The IV model comes with leather interior and an upgraded stero/Bluetooth system. We went for the optional moon roof package which includes a power tilt/slide moonroof with solar powered ventilation system and remote air conditioning, plus a voice-activated touch-screen DVD navigation system with an even more upgraded JBL stereo with 4-disc CD changer, eight speakers, USB port with iPod connectivity, integrated satellite radio, hands-free phone and music streaming via Bluetooth, plus an integrated backup camera.

(You can get the navigation system with upgraded stereo and Bluetooth as a separate package without the moonroof for about $2000 less, but there didn't seem to be many of these on lots around town and I wanted a moonroof anyway.)

When we bought the 2007 we got a pretty basic model because we weren't sure we would like it. We ended up with a lot of clutter and wires for an external GPS plus an XM radio receiver, so this time we decided to get all that stuff factory installed and I am very happy with that decision. Also, the cloth seats in the 2007 were not all that comfortable on long trips, and the leather seats in the 2010 seem way more comfortable so far.

The overall look of the Generation 3 Prius is more agressive, and handling seems a little tighter and more precise but that may just be the new car feel. The ride is more comfortable and it seems quieter with less interior road and wind noise. Overall, the driving experience feels more refined.

It's similar to the 2007 Gen. 2 in some ways, but radically different in others. It has a completely redesigned power train with a new, more powerful 1.8 liter engine that somehow gets better gas mileage. The redesigned body provides more passenger headroom and interior space and has a .25 drag coefficient, which Toyota says makes it the most aerodynamic production vehicle on the market.

No user serviceable parts inside.

The redesigned hybrid drive system has three new modes, EV (electric only), economy, and power. EV mode has a very limited range and top speed, so I guess it's only useful in parking lots. Economy mode is similar to the standard Generation 2 operation, and power mode provides a boost for on ramps and passing on the highway at the expense of fuel economy. You can definitely tell a difference in performance when merging into highway traffic and passing, even without power mode. We haven't driven it enough to know how it compares on fuel economy.

The completely redesigned instrument panel has new ways to monitor fuel economy, including a real-time MPG meter prominently displayed next to the speedometer, two separate trip logs, a real-time battery/engine energy flow display similar to the previous version, and an updated fuel efficiency log/graph with two separate trip meters. It now stores the trip meter log when you reset it, and you can review previous logs and display the log with the highest MPG achieved. There is also a new miles-to-empty display.

The redesigned console takes up more room and I didn't think I would like it. I'm getting used to it, though. There's an open space underneath for stuff like a purse, and there's a cigarette lighter power adapter down there for hooking up your cellphone charger or whatever.

The console arm rest has two sliding positions - fully closed, and one position back to reveal a second cupholder. It seemed a little weird at first, but you get used to it. The side door cupholders are small and you can't fit a water bottle. It appears they will hold a standard beverage can only. (UPDATE: The Mrs. points out that it holds a standard size water bottle just fine. I guess it just didn't look like it would.)

Of course my favorite new features are the built-in XM radio, navigation system, and Bluetooth. Setting all this stuff up is like setting up a new PC, though. The owners manual is over 600 pages, and there is a separate, almost 400 page manual for the nav/stereo/phone system. I haven't read them yet, except for the page on programming the garage door openers.

I hadn't used a Bluetooth phone connection in a car before, and I have to say I'm pretty impressed with the hands-free voice activated operation. There are buttons on the steering wheel to activate the voice prompts, answer and hangup, and adjust volume.

(When you operate any of the steering wheel buttons little control panels appear in the heads-up instrument panel display so you can keep looking forward.)

My Droid synched right up and transferred all my contacts right over with very little drama once I figured out I had to answer a prompt on the phone to allow it. Our older LG flip phone synched right away, but it appears you can only transfer one contact at a time? At any rate, it's easy to enter contacts, phone numbers, and speed dials. It supports up to four separate phones, and once phones are paired it automatically connects when one is in range and has Bluetooth on.

One cool feature that I haven't tried yet is music streaming over Bluetooth. Presumably this will let you load up your smartphone with music for a road trip and wirelessly stream it to the stereo. There's also a USB connection, but I'm not sure what it's for yet. It may only work with an iPod. (UPDATE: I'm told the USB should work with any USB MP3/WMA player. I couldn't get it to work with a USB memory stick.)

The XM radio has three banks of six presets, and comes from the factory with a 90 day trial subscription. Since we already have a subscription, we can add this one to our "family plan" when the 90 days are up. The JBL sound system is killer.

The navigation system maps seem fairly accurate and up to date, and it has lots of features for selecting destinations and routes. It also has voice activation, but I haven't tried that yet.

One major complaint about the navigation system is that it's really, REALLY slow when browsing points of interest. It's basically unusable unless you plan ahead and program them all in. I guessing it's because it's DVD based. I don't know why they didn't build in a way to copy it to a flash drive or something. I suppose we will still use the Droid for finding and navigating to local restaurants, parks, attractions and such when traveling. One nice feature of the nav system, though, is a local emergency services page that directs you to the nearest hospital, police, or fire station depending on your location.

The moon roof is a nice addition which I missed having in our old Prius. The solar powered ventilation is sort of a gimmick, but it actually seems to work.

I wasn't initially sold on the idea of a "remote air conditioning" feature, but now I am. We stopped by Puleo's to pick up a takeout order on our way home from walking Gracie in the park last night. We left her in the car and hit the remote AC button on the key fob, which locks the doors and turns on the AC. I wouldn't recommend doing this for very long, though, because the AC will only operate for about five minutes before running down the hybrid battery.

Most people will use remote AC to start the AC as they approach the vehicle. Along with the solar powered ventilation, having the AC already running when you get in will be pretty nice in the summer.

We got our new Prius at Rick McGill's Airport Toyota. I wasn't expecting to be able to deal with them, but wanted to support our local economy in Alcoa and they are certainly convenient to us so I thought I'd try. I was pleasantly surprised and very pleased with our salesman and finance guy, and I think we got a fairly decent deal (way off MSRP at least). I'm guessing all the Toyota dealers are cutting out (most of) the BS and doing whatever it takes to sell cars.

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