In an address in Tokyo, Honda CEO Takanobu Ito added that the next-generation Civic Hybrid will switch to a lithium-ion battery when it goes on sale in 2011. That would bring the Civic into line with the Chevy Volt, Nissan Leaf, Ford Focus-based EV and a plug-in Toyota Prius. Those upcoming models highlight the industry’s shift to lithium-ion batteries, which pack roughly twice the power at half the size and weight of current nickel-metal hydride batteries.

Like every automaker, Honda must boost fuel economy across the board to achieve an average 35.5 mpg by 2016, the biggest rise in fuel-economy standards since the Clean Air Act was passed in the '70s. Honda is also gearing up for a world that will almost surely regulate the carbon-dioxide emissions associated with global warming. The European Union, along with regulators in the United States, may require new cars to produce roughly 130 grams of CO2 or less per kilometer driven, a figure already achievable with today’s fuel-saving technology: The Toyota Prius, among the world’s cleanest cars, produces just 89 grams of CO2 per kilometer.

"Honda will have no future unless we achieve a significant reduction of CO2 emissions,” Ito said in his address. To that end, Honda has recently added two highly affordable hybrids to its lineup, with both the Insight and two-seat CR-Z hatchback starting at less than $20,000. Ito also outlined plans that include a plug-in hybrid and EV demonstration program in California by year-end, in a link-up that includes Google, Stanford University and the city of Torrance.

Saying that internal-combustion engines would remain the dominant technology for years to come, Honda will begin revamping its engine and transmission lineup in 2012. Diesels can achieve significant CO2 reductions as well, Ito said, though Honda has backed away from plans to offer diesel models in America. And for the long term, Honda continues to back hydrogen fuel-cell vehicles as offering “the ultimate mobility.” Honda’s fuel-cell FCX has seemed easily the most sophisticated, market-ready hydrogen vehicle created by any manufacturer, though most experts say hydrogen fuel cells remain too costly to bring to showrooms any time soon.

Expect to hear much about how Honda is getting beaten to showrooms by cars like the Chevy Volt plug-in and Nissan Leaf EV, which will reach a handful of U.S. markets by year end. But being first to market with hybrids did little for Honda, whose original 2-seat, impractical Insight was crushed in both sales and green cred by Toyota’s Prius. As with the Prius, the most successful plug-ins and EVs won’t necessarily be the ones that get there first, but the ones that get it right.