Toyota is actually positioning the Yaris to do battle with the Insight, however, continuing the company's angle of portraying the Honda hybrid as smaller and further down-segment than the Prius.
"We are developing a low-priced hybrid vehicle like Honda's Insight," Akihiko Otsuka, chief engineer of the new 2010 Prius, told the Nikkei. "We are going to compete by expanding our hybrid-vehicle lineup to smaller hybrids, in the class of the [Japanese-market] Vitz and Yaris."
But American's might more readily analogize the very similar-looking Insight to the Prius and therefore compare the Fit to the Yaris hybrid. Either way, it's the public that will benefit as a new generation of compact, inexpensive and highly efficient hybrids comes to market.
Pricing for the third-gen Prius is still unannounced, but the Yaris hybrid will certainly check in several thousand dollars below its bigger brother, and may even come in well below the $20,000 mark - a target Honda has just managed for its Insight. The Yaris will need to stay cheap to compete with the Fit, which is expected to start at about $2,000 more than the standard Fit's $14,750 starting price when it finally arrives around 2015.
The hybrid drivetrain would be adapted from the Prius application, using the same time-tested and inexpensive nickel-metal hydride batteries instead of more expensive and finicky lithium-ion units. Engines will also likely be co-opted from the existing Toyota lineup, possibly even offering an application for the second-gen Prius' 1.5L engine, now replaced with a 1.8L unit in the 2010 model.