CHIBA, Japan (Reuters) - South Korea's Hyundai Motor ( HYMTF ) said on Friday it will introduce the cheapest compact electric car in Japan, to penetrate a market dominated by local auto giants with established hybrid petrol-electric vehicle technologies.

The Japan launch of the Hyundai Inster follows attempts by foreign brands such as Tesla to enter a country which has seen a slow take-up of EVs. With the Inster, Hyundai will tackle the problem with an approach akin to the low-price strategy of China's leading EV maker BYD.

The 2.85 million yen ($18,000) entry-model price tag will be the lowest for a compact electric car in the country, below the 3.63 million yen BYD set in 2023 with its Dolphin.

Inster, which debuted in Europe last year after launching in South Korea as Casper Electric, will be open for orders from Japanese customers from Friday, Hyundai said at a press conference during the Tokyo Auto Salon motor show.

In the Japanese ultra-compact, limited-power "kei car" category, Nissan Motor's Sakura is sold at 2.60 million yen and is the most popular EV in the country.

But even Sakura had fewer than 23,000 sales last year, down nearly 40% from 2023, an industry tally showed, highlighting the lack of popularity of EVs in a Japanese passenger car market that has roughly 4 million annual vehicle sales.

Last year, Hyundai sold only 607 vehicles in Japan, while BYD sold 2,223. Tesla did not disclose its Japan sales.

Hyundai, which forms the world's third-largest auto group with Kia, re-entered Japan's passenger car market in 2022 with only electric and fuel cell vehicles, after exiting in 2009 due to low sales in a country dominated by Toyota Motor, Honda Motor and other Japanese auto majors.

($1 = 158.0000 yen)