FRANKFURT, May 28 (Reuters) - Volkswagen

will develop low-cost electric vehicles in a bid to better

compete with fierce Chinese rivals, Europe's largest carmaker

said on Tuesday, after talks with Renault to team up

on the project collapsed earlier this month.

The target is to produce electric vehicles for the European

market priced at around 20,000 euros ($21,746), the company

said, adding a world premiere was planned for 2027.

"It's about entry-level electric mobility from Europe for

Europe," Volkswagen Chief Executive Oliver Blume said. "In doing

so, we combine a clear commitment to Europe as an industrial

location, a European industrial policy and ultimately act in the

interests of European customers."

The move come as Chinese rivals, some of which command a 30%

cost advantage over Western peers, are muscling into Europe to

grab market share and attack established carmakers on their home

turf.

Last week Volkswagen said the European industry had between

two and three years to prepare for the competitive threat,

warning that the sector's survival was otherwise at risk.

Volkswagen brand boss Thomas Schaefer said that despite the

low-price point, the planned entry-level model would set

standards in terms of technology, design and quality, adding

this had become more challenging due to higher costs.

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