South Korea's Hyundai Motor said on Friday it would introduce the cheapest compact electric car in Japan, to penetrate a market dominated by local giants with established petrol and hybrid vehicle technologies.

The Japan launch of the Hyundai Inster follows attempts by Tesla and other foreign brands to enter a country seeing a slow take-up of EVs. With the Inster, Hyundai will take a low-price strategy akin to 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 Japan, below the 3.63 million yen BYD set in 2023 with its Dolphin.

Inster, which made its debut in Europe last year after launching in South Korea as Casper Electric, will be delivered to Japanese customers starting around May, Hyundai Mobility Japan CEO Toshiyuki Shimegi said at a news 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.

"Inster is our core product to win Japanese customers' recognition," Shimegi said, adding that it help Hyundai meet its goal of boosting Japan sales tenfold in the next five years.

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.