An "insider" at LLN has it on good authority that the oft-rumored Prius brand is, in their words, "a go." According to their source, the goal of the spin-off is to create cheaper hybrid models that would command a marginal premium over their standard, hybrid-free counterparts.
The rumormill pot gets stirred a bit more with the claim that the 2010 Prius could achieve up to 80 mpg. Combine that with the rumblings about a Prius price cut and it's starting to look like the Volt will have it's work cut out for it. Informed speculation also says that the reworked Prius may be joined by an upscale five-door Prius model in the $28-30,000 range and that Toyota could be planning a four-door "Baby Prius" expected to sell in the mid-teens, utilizing a nickel metal hydride battery pack and coming to market in 2013.