Toyota has always backed its hybrid technology as the key to reducing fuel consumption and carbon emissions, but as advanced as the technology is, diesel powered cars manage to offer similar levels of eco-friendliness but with more performance to boot. It doesn’t help that hybrid vehicles are considerably more expensive than their oil-burning counterparts as well.

That’s why Toyota is hard at work developing cheaper hybrid systems. Reuters reports that Toyota is hoping to make as much money from hybrids as it does from conventional cars by the end of the decade. The news comes from Toyota’s vice president in charge of powertrain development, Masatami Takimoto, who said cost cutting on the electric motor, battery and inverter were all showing positive results and by the time Toyota’s sales goal of one million hybrids annually is reached, it “expect margins to be equal to gasoline cars”. Takimoto also made the bold claim that by 2020, hybrids will be the standard drivetrain and account for "100 percent" of Toyota's cars as they would be no more expensive to produce than a conventional vehicle.

Last year Toyota sold 313,000 hybrids and this year it's expecting close to 430,000 sales. The most popular hybrid model, the Prius, has been suffering of late in the US because of a wind up of tax credits, which saw prices rise. Experts are predicting that the new model, due late next year or in only 2009, will feature a cheaper lithium-ion battery system.

As for alternatives, Takimoto mentioned that plug-in hybrids, which run on electricity alone and can be charged from a household power socket are still years away from being feasible. While diesel vehicles, as favored by the European carmakers, require expensive particulate filters and other traps that cost almost as much as the first generation hybrid technology.