Honda entered the hybrid market before Toyota, but over time it made a fateful mistake: it failed to visually distinguish its line of hybrids. The Prius’ distinct shape is like peacock feathers — it signals your identity to the world. Who wants to be virtuous if nobody knows about it?

Now Honda’s gotten the message and it’s returning to the fight:

[Honda is] working on a new high-profile hybrid — a Prius fighter that analysts expect will have the highest mileage on the road when it arrives in 2009. Code-named the “Global Small Hybrid,” Honda’s new gas-electric model won’t be a version of anything else in its lineup. Instead, Honda execs say it will be a five-passenger, small family car priced under $22,000. This time Honda won’t make the mistake of wrapping its hybrid in the sheet metal of its everyday cars: instead, analysts expect the new Honda will have the larva styling the Prius pioneered — which now embodies the green-car look. Honda will also outdo the $23,000, 60mpg Prius on price and mileage in hopes of attracting 100,000 buyers a year–three times what the hybrid Civic sells.

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Meanwhile, Toyota is expanding the Prius into a whole line:

Industry sources say Toyota is developing three Prius models–a small car, a family car and a crossover utility vehicle that will begin rolling out in 2009. All will be sold inside the Toyota showroom, but in a separate area, like its youth brand, Scion. “Ten years ago people tried the Prius because it was a Toyota,” says Press. “Today, people are buying Toyotas because we have the Prius.”

Even GM’s finally getting in the game:

General Motors, which dismissed the Prius as a curiosity a few years ago, is now rolling out four hybrids and generating buzz for its Chevy Volt plug-in hybrid electric car, which it says will hit the road in 2010.

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Unanswered in all of this is my central question about hybrids: Where’s my hybrid minivan? I’m telling you, that market is going to be huge.