Toyota's leading Prius is fast approaching new competition from Honda's low-cost next generation Insight, aleady released and selling for less than $20,000 with greater than 40 mpg fuel efficiency.  The current Prius sells for $22,000 and the new 2010 model may be considerably more.

To counter this trend, the automaker has confirmed it will be launching its own low-cost, small hybrid along with the updated 2010 Prius.

The lower cost car is expected to reach showrooms in 2011.

"We are developing a low-priced hybrid vehicle like Honda's Insight," said Prius Cheif Engineer Akihiko Otsuka 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."

Source (Automotive News)