Specialist sports car maker Lotus should know in about three months whether a second attempt to raise cash from the UK government has succeeded.

The Norfolk based company is embarking on an ambitious GBP500m expansion plan funded mainly by its parent company, Proton, oil company Petronas and a consortium of Malaysian banks to turn it into a rival for Porsche.

The company intends to compete in every sports car segment of the market.

Lotus originally applied for a GBP27.5 m grant from the Regional Growth Fund, mainly for research and development, to allow the company to release capital previously allocated to R&D to build a new production plant creating 600 to 1,000 new jobs depending on sales of the new models.

Lotus missed out on a first round of funding from the regional fund in April though Bentley, Jaguar Land Rover and Nissan were all successful.

This time the application has been scaled down to around GBP10m for a new factory at the company’s headquarters at Hethel, near Norwich, which would make the new front engined cars, the Elite and Eterne.

These have increased by an additional model with Lotus confirming it will make its first city car, called the Ethos, in three years’ time.

Lotus is spending about GBP60m on infrastructure improvements at Hethel.

The government’s GBP1.4bn fund supports jobs in areas currently mainly dependent on the public sector for employment.

“We have to survive the next two years on our current cars,” said Lotus chief executive Dany Bahar, who promised exciting revamps of the Lotus Evora which was launched 18 months ago.

Reacting to customer feedback that the proposed new Elan was too similar to the Esprit, due next year, it has now been put back until 2017.

He said Lotus had sold about 2,740 cars so far this year, up about 3% on last year.

Much of the predicted sales growth will come from the Far East. Lotus has sold 120 cars in its first three weeks in China.

The worldwide dealer network is due to expand from its present 32 markets to 50 by 2014.

If the grant does not arrive the new cars may be built overseas, said Bahar.

Independent car assembly companies are struggling so it is likely Lotus could strike a good deal with Magna Steyr in Austria, which has been building the Aston Martin Rapide, or Valmet in Finland which has made the Boxster for Porsche.

Lotus has recently finalised the acquisition of land adjacent to the current factory on which to construct a 8,500m2 museum.

The Ethos will be based on a Proton model in a similar manner to the way the Aston Martin Cygnet is derived from a Toyota iQ but the Lotus will be modified more and deliver a sportier drive.

Lotus is keeping quiet about the power train but it is likely a petrol-electric hybrid will figure in the line-up.

Predicted sales are 1,200 to 1,800 per year. There is no guidance yet on price but it is expected to be considerably less than the GBP30,000 Aston Martin is asking for the Cygnet.

Proton MD Syed Zainal Abidin Syed Mohd Tahir said Proton backs Lotus entirely with its current and future plans.

Bahar added it was “a media fantasy” that Lotus was looking to link up with another company.

“We could not be more happy with Proton,” he said.

Lotus has a unique motorsport history, winning in more categories than any other car maker.

Earlier this month it returned to Le Mans and achieved seventh in class and 22 overall with an Evora GTE. An impressive achievement for a new race car.