Honda plans to launch a cheaper hybrid car to go on sale from early next year.

The maker says it expects to sell 200,000 of the entry level hybrid cars a year, although we don't know if they will be available in Australia.

Honda says the cheaper hybrid will allow more people around the world to adopt cleaner motoring technology and reduce global car emissions.

It anticipates total sales of 500,000 hybrids a year. As well as the new affordable hybrid, Honda will build a Jazz hybrid and sporty CR-Z and Civic hybrids.

It plans to reduce its production costs with a new electronic control unit and a thinner, more compact battery. A thinner motor has also been developed.