Lotus is set to apply for £10m of Government support for a new factory at its Norfolk base that would create up to 1,000 new jobs.
This comes days after the British sportscar manufacturer revealed plans to build its first city car, the Ethos, in 2014.
That vehicle, which follows a trend set by UK rival Aston Martin with its Cygnet, would bring to five the number of models Lotus plans to launch before 2015 in a £500m expansion plan.
The Ethos, with an electric or hybrid powertrain, will be jointly developed with Lotus's owner Proton, and badged as a Lotus in Europe and Proton in Asia. It will be built in Malaysia, but is likely to be finished at Norfolk.
Lotus expects around 1,500 sales annually.
Aston Martin's Cygnet is a development of Toyota's IQ.