Let the hybrid price wars begin.

A few days after Honda announced pricing for its new Insight hybrid in the United States, making it the first sub-$20,000 hybrid on the market (at least before destination charges), a report has come out of Japan that Toyota has plans for a cheap hybrid of its own.

According to the Nikkei business daily in Japan, as reported by Reuters, Toyota plans to develop a new hybrid that will sell for less than $20,510. It could be priced 20 to 30 percent cheaper than the Prius, and come to market as early as 2011.

Earlier this week, Honda said the 2010 Insight would be priced at $19,800 in the United States, or $20,470 including destination charges, which is nearly $2,250 cheaper than the outgoing Toyota Prius; pricing for the new Prius, due this spring, has not been announced. In Japan, the Insight costs around $20,000, and demand has been so overwhelming that Honda has increased production beyond the original 200,000 it had planned to make over the next year.

Even though the Insight gets far fewer miles per gallon than the new Prius, Honda is counting on customers preferring to pay less up front for a hybrid. Its new ad campaign, which kicks off on Monday, is called “Hybrid for Everyone.”