One possible partner is French carmaker Renault, but talks are at a very early stage and may not come to fruition, the sources said.

According to the Reuters agency, Volkswagen refused to comment on the Handelsblatt newspaper’s information. A spokesperson for Renault said that cooperation is necessary to achieve competitiveness in the market for low-cost small electric cars. “We are having various talks, but nothing is finalized,” he added.

European carmakers are now focusing on developing affordable electric cars as they face stiff competition from US company Tesla and cheap Chinese models. According to research company JATO Dynamics, the average selling price of electric cars in Europe in the first half of this year was over 65,000 euros (roughly 1.6 million CZK), while in China it only slightly exceeded 31,000 euros (roughly 755,000 CZK), writes Reuters.

The head of the Volkswagen concern, Oliver Blume, said last month that the company has not yet made any decision regarding the production of an electric car for 20,000 euros. But he thinks that the company could start producing such a car in the second half of the decade.

In March, Volkswagen presented details of the development of a fully electric car for 25,000 euros (roughly 610,000 CZK), which is to be launched on the market by 2025. At the time, the company said that it was also working on an electric car for 20,000 euros, but did not provide further information.