Chief Engineer Akihito Otsuka of Toyota confirmed to the Japanese Nikkei newspaper that the company is developing a new, lower-cost hybrid-electric version of the Yaris. It will compete against Honda's Insight hybrid which has just gone on sale, as well as the Honda Fit hybrid which is due in 2012.
The Toyota Yaris currently achieves 29 MPG in the city and 35 MPG highway, according to the revised EPA estimates. It became a hit at first due to high gas prices, but now enjoys strong sales mostly due to its value and affordability.
The current generation Toyota Yaris is due for a redesign in 2011, and the hybrid is expected to launch in that timeframe. In Japan, the Yaris hatchback is known as the Vitz, while the sedan is known as the Belta. The Yaris hybrid will most likely be based on the Belta sedan, due to space constraints.
It will utilize a smaller version of the third generation Hybrid Synergy Drive derived from the new third generation Prius. It will also use lithium-ion batteries in order to conserve weight and size.
Toyota owns sixty percent of Panasonic EV Energy, in a joint venture with the Matsushita Electric Industrial Company. It is building two new factories in order to bring annual output capacity to one million batteries. Although currently producing nickel-metal hydride batteries, it will start lithium-ion battery production this year. Toyota's former President Katsuaki Watanabe stated last year that mass production of lithium-ion batteries would start in 2010.
Toyota will continue to sell the six-year-old, second generation version of the Prius in Japan. Although released in 2004, it will serve as a lower cost hybrid option from Toyota to temporarily fight the Honda Insight until the Yaris hybrid is available.
The Yaris hybrid could be produced at Toyota's new Prius factory in Blue Springs, Mississippi.
Despite the low cost of the Insight, the Prius remains popular as it is still the most fuel-efficient car in mass production for the U.S. market.