FRANKFURT (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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