The press release arrived in October, declaring the Environmental Protection Agency rates the all-new '04 Toyota Prius gas-electric hybrid at 55 mpg (4.2L/100 km) in combined city/highway driving.

Forgive the skepticism, but haven't we heard this before about the Prius? Toyota Motor Corp. launched the hybrid in the U.S. in 2000 with claims of 48 mpg (4.9L/100 km), and lead-foot journalists soon called the assertions exaggerated. Indeed, some European turbodiesels were getting better mileage, according to tests.

Don't get me wrong. I was a fan of Prius in 2000 and remain so after driving the new model. But a few hours of seat time is no way to judge whether the 55-mpg rating holds up in real-world driving.

Achieving the best fuel economy in Prius becomes a game, as the mileage gauge jumps wildly depending on many variables.

Driving uphill into the wind, with the 1.5L Atkinson Cycle 4-cyl. gas engine (76 hp) humming away, the mileage is likely to stumble in the low teens.

But once the hill has been crested and the 50-kW (67-hp) electric motor kicks in, the mileage skyrockets. Apply the regenerative brakes and watch in awe as the 7-in. (17-cm) LCD screen proclaims the Prius is achieving 99.9 mpg (2.3L/100 km).

That's a cool parlor trick, but it's average mileage that matters. We'll see how Prius does when it arrives for 10 days of Ward's Best Engines trials. Prius earned a Best Engines award in 2001, despite complaints of an annoying “power surge” that came out of nowhere, at highway speed.

Toyota engineers say the old powertrain control unit occasionally responded with too much electric power if the wind blew a certain way, or if the road gradient changed. The new Prius, Toyota says, eliminates the surge by employing 32-bit processors better equipped to respond to driving conditions.

Our test drive confirms Prius is remarkably smooth on highway and surface streets. It doesn't accelerate hard when throttled (0 to 60 mph [96 kph] in 10 seconds), but that's irrelevant to Prius buyers.

The new Prius also has a 3L vacuum bottle that keeps engine coolant hot (for days, if necessary) when the engine shuts off. When the gas engine kicks back on (or starts in the morning), the warm coolant helps eliminate cold start-related emissions.

As for styling, Prius has lost some of its quirky lines, but it's clearly directed at buyers who care more about the environment than sexy curb appeal.

It's bigger, highly functional, amazingly quiet and stylish inside and thankfully void of awkward lines on the dashboard. A joystick controls the capable electronic continuously variable transmission, but the lever doesn't stay in the gear selected. Drivers will adjust or become frustrated.

Toyota is proud of Prius, which will be joined by the hybrid Lexus RX 330 cross/utility vehicle in a year, and, later, a hybrid Highlander CUV.

Despite its new technology, the '04 Prius carries the same base price as its predecessor: $19,995. Add $5,245 for an option package that includes curtain airbags, 6-disc changer and a voice-activated navigation system that enables hands-free calling with a Bluetooth phone.

Toyota insists Prius is profitable — a feat the company says was achieved once global sales exceeded 100,000 units. Current sales stand at 125,000, and Toyota plans to sell 36,000 in the U.S. in 2004.

2004 Toyota Prius

Vehicle type: Front-engine, front-drive, hybrid-electric 5-passenger 5-door hatchback

Engine: 1.5L (1,497 cc) DOHC I-4 aluminum block/alum. head; permanent-magnet motor

Power-ICE (SAE net): 76 hp

Torque-ICE: 82 lb.-ft. (111 Nm) @ 4,200 rpm

Power-motor (SAE): 67 hp @ 1,200-1,540 rpm

Torque-motor: 295 lb.-ft. (400 Nm) @ 0-1,200 rpm

Bore × Stroke (mm): 74.9 × 84.6

Transmission: Electronic CVT

Wheelbase: 106.3 ins. (270 cm)

Overall length: 175 ins. (445 cm)

Overall width: 67.9 ins. (172 cm)

Overall height: 58.1 ins. (148 cm)

Curb weight: 2,890 lbs. (1,311 kg)

Market competition: Honda Civic Hybrid