Honda announced that the development of its hybrid-only model slated for release in early 2009 is going well, NextEnergyNews reports, and that its hybrid system will cost about half what the current Honda Civic Hybrid's system (shown above) costs. Honda executive VP Koichi Kondo said in an earnings call that the key is that the new system is smaller, lighter, and simpler in design.

The report said that the the hybrid-only model will be a five-passenger car with five doors, with the size somewhere between the Fit and the Civic, which confirms earlier reports. (Compare that to the fuel-cell-powered Honda FCX Clarity, which slots in between the Civic and the Accord in size.) The new hybrid model is expected to cost in the neighborhood of $18,500, which is significantly below what seems to be a $20,000 floor in today's hybrid market.