I don't buy this argument. The modest cost of an increased battery pack would certainly be less than the cost of the complex drivetrain, the much, larger less efficient engine. A 4 kwh utilized Li-Ion battery pack in low volume would be about $640 extra, not a large amount. Total package cost would probably be comparable, until scale economies kick in, which would bring the cost of the serial hybrid below that of the parallel, with much better performance. For the presumed customer, green friendly or fuel cost conscious, the much better mileage with also easy and far superior plug-in option (and way less expensive to run off of utility power) would make it an extremely attractive option. Oh, and I forgot to mention the much better life expectancy, much lower maintanence, and much simpler repair / upgradeability.

I would be more inclined to believe that Toyota's secret settlement with Chevron / Ovonics, on the NiMH battery lawsuit precluded using the plug-in option with their batteries. Why does the Prius' sold in North American not have the EV button on them, which the Asian & European models do have?
As for Toyota's supposed plug-in vehicle for sale in North America - seeing is believing and a 9 mile EV range is a sick joke.