Toyota has confirmed the rumor that it is working on a smaller, more affordable hybrid for its lineup. The car will be a spin-off of the Yaris and will be priced to compete with the Honda Insight.
The Insight has become a hot seller in Japan and was recently launched in the U.S. With a base price of $19,800 (without destination), Honda was able to make good on its "under $20,000" price promise. While the Insight doesn't offer as many amenities as the Toyota Prius, it does undercut the current model's price by almost $2200. With the next generation Prius expected to cost even more and Honda planning to launch a hybrid version of its Fit subcompact, the hybrid wars are raging. Toyota's Akihiko Otsuka, chief engineer of the 2010 Prius said "We are going to compete by expanding our hybrid-vehicle lineup to smaller hybrids, in the class of the Vitz [sold in Japan] and Yaris."Part of Toyota's hybrid strategy involves bringing more core technologies in-house. Currently, the electric motor and inverter for the Prius are manufactured by Toyota. Now the company is in the process of developing its own lithium ion batteries so it won't have to rely on Panasonic for power packs. The 2010 Toyota Prius will go on sale in May. The company will also continue to offer a stripped down version of the current generation Prius in Japan to compete with the Insight. The new model is likely to have a price tag of around 2 million yen (about $20,510) and it could go on sale as soon as 2011.