Toyota Motor Corp. (7203.TO) Thursday rolled out a gasoline-electric hybrid version of its Lexus LS sedan in Japan and hopes to halve the cost of making hybrid systems by the time it reaches its targeted sales of 1 million hybrid vehicles.

Japan's biggest car maker by sales volume said it launched the hybrid model of the Lexus flagship luxury sedan in the domestic market and plans to introduce the model in North America, Europe and other markets starting in June.

The new model shows how much Toyota's hybrid technology has improved since it launched the world's first mass-produced hybrid car "Prius" in 1997.

The LS hybrid, which has a five-liter engine, an electric motor and an all- wheel drive system, has the fuel-efficiency of a three-liter vehicle but can accelerate on par with a conventional six-liter vehicle while emitting half the CO2, Watanabe said.

For 2007, Toyota aims to boost its hybrid sales 38% to 430,000 hybrid vehicles worldwide with 250,000-300,000 coming from the U.S. market. Annual hybrid sales in the U.S. are expected to more than triple to 780,000 vehicles by 2012 from 212,000 sold in 2005, according to J.D. Power Asia Pacific.

Toyota aims to sell 7,000 LS hybrid sedans globally in 2007. It targets sales of more than 1 million hybrid vehicles a year in the early 2010's by doubling its lineup.

The annual sales goal is as much as its total hybrid sales of the past 10 years.

The latest model is the company's third Lexus hybrid and 12th overall including the recently launched Camry hybrid and some commercial vehicles.

The hybrid system is one of the closely watched technologies that can help improve vehicles' fuel-efficiency.

But a major challenge in boosting the popularity of hybrid vehicles is their high costs.

Executive Vice President Masatami Takimoto said at the press conference that the company hopes to cut the costs of making hybrid systems in half by the early 2010's.

Hybrid Toyota models are up to about Y1 million more than similar gasoline- powered cars.