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UPDATE 2-VW considering cooperation with Renault on 20,000-euro electric car -Handelsblatt

(Adds Renault spokesperson in paragraphs 5-7, adds background from paragraph 8)

BERLIN, Dec 8 (Reuters) - Volkswagen is speaking with potential partners, including France's Renault , about cooperating on the development of its 20,000-euro ($21,476) electric car, Germany's Handelsblatt newspaper reported on Friday, citing people familiar with the matter.

The German carmaker is interested in cooperating on a platform for the car that it hopes will make battery-powered vehicles affordable for the masses, Handelsblatt reported.

Talks with Renault are still "at a very early stage" and could come to nothing, Handelsblatt cited the sources as saying.

Annual production of 200,000 to 250,000 vehicles is the target for both partners together, according to Handelsblatt.

Volkswagen declined to comment on the report.

A spokesperson for Renault said that cooperation was necessary to be competitive with small-entry electric vehicles.

"We are in different discussions but nothing has been finalised," said the spokesperson.

European carmakers have stepped up efforts to bring more affordable electric vehicles to market as they face increased competition from U.S. carmaker Tesla and cheaper Chinese models.

The average retail price of an EV in Europe in the first half of 2023 was over 65,000 euros, according to autos research firm JATO Dynamics, compared to just over 31,000 euros in China.

Renault last month announced the launch of a new EV Twingo, called Legend, at less than 20,000 euros, with finance chief Thierry Pieton saying the aim was to democratise the EV market, while Volkswagen in March laid out the details of an all-EV under development for 25,000 euros, to launch by 2025.

The German firm said at the time it was also working on a 20,000-euro vehicle, but did not provide further information.

Volkswagen CEO Oliver Blume said last month that the company had not made a decision on producing the car yet but he was convinced it could get there by the second half of the decade.

($1 = 0.9313 euros) (Reporting by Nette Noestlinger, Gilles Guillaume and Kate Entringer; Writing by Miranda Murray; editing by Matthias Williams, Louise Heavens and Susan Fenton)