Why is Honda betting on small hybrids?

Honda's biggest hybrid for years

When it comes to US made hybrid vehicles, the focus has been on SUVs and, in the near future, larger sedans. Even the Toyota Prius is going to grow in size. But, is bigger really better? Honda doesn't think so.

According to AutoWeek, Honda "plans to put hybrid systems into compacts and subcompacts because that's where the green technology achieves its greatest efficiencies, said Masaaki Kato, president of Honda R&D Co., the automaker's product development arm," because "hybrid systems are best used in small cars because small hybrids most often are used for city driving, where regenerative braking constantly recharges the batteries."

And smaller hybrids mean smaller price tags. As we asked on Toyota Prius Smackdown, might not cheaper hybrids be far more appealing to consumers than more expensive plug-in hybrids, at least until battery costs are significantly reduced?