Toyota Motor Corp  said its rechargeable Prius PHV plug-in hybrid would be priced from 3.2 million yen ($41,000) in Japan, higher than it flagged two years ago.

Toyota's first plug-in model adds an external charging function and more batteries to the popular Prius to enable longer-distance driving on electricity alone.

Toyota's entry into the plug-in hybrid segment ups the ante on the alliance of Nissan Motor Co and Renault SA  as they aim to take the lead in the field of rechargeable cars.

The Prius PHV's price tag is lower than the 3.76 million yen for Nissan's Leaf electric car and, at the yen's current exchange rate, matches the $41,000 for General Motors'  Volt plug-in hybrid, before subsidies.

But it is higher than Toyota executives forecast two years ago, when they said it would be "affordable" and far below 3 million yen.

Toyota, the pioneer of gasoline-electric hybrid cars, said it aims to sell 35,000 to 40,000 of the Prius PHV cars annually in Japan, where it will go on sale from Jan. 30. It aims to sell about 60,000 combined in Japan, the United States and Europe.

Because they can also run on gasoline, plug-in hybrids eliminate the "range anxiety" seen as one of the main shortcomings of battery-powered purely electric cars. Nissan's Leaf has a range of about 160 km (100 miles).

GM's Volt, however, has hit a snag, with US regulators deciding last week to investigate the safety of the car after its 400-pound (180 kg) battery pack caught fire in crash tests.

The Volt uses "range extender" technology that uses the gasoline engine to generate electricity on-board. The Prius PHV packs high-capacity lithium-ion batteries that can be charged in 90 minutes on 200 volts. It can travel 26.4 km (16.4 miles) using only the electric motor, making a short commute possible on zero emissions. On a full charge and with a full tank of gasoline, the car could theoretically travel well over 1,000 km (620 miles). It has a mileage of 61.0 km/litre in combined EV and hybrid driving modes, Toyota said.     

Toyota leased about 600 Prius PHVs, mainly to governments and businesses in Japan, the United States and Europe last year. - Reuters