There's been lots of internet chatter over the last few weeks surrounding rumors in Japan that Toyota is hard at work developing a new low-cost hybrid model that would use Prius technology but be priced to match the new Honda Insight. It's no secret that the Insight's big claim to fame is its low asking price, and much of that attractive sticker can be attributed to Honda's decision to base most of the car on existing platforms and technologies.
Like the Civic Hybrid, the 2010 Honda Insight uses the automaker's proprietary Integrated Motor Assist technology, but instead of using the rest of the Civic platform, Honda cribbed a large portion of the Insight's chassis on the Fit. This allowed for a substantial cost savings, and Toyota may choose to do the same for its next hybrid passenger car by placing its Hybrid Synergy Drive powertrain in a mass-market vehicle platform.
One attractive prospect might be to borrow the architecture used in the Toyota Auris, a hatchback that's sold in Europe and Asia that shares underpinnings with the American Corolla. We can't say that these rumors are true, but it does seem like one logical way to save a huge chunk of money on development costs.