By John Reed

Lotus will next week apply for a government grant worth about ?10m to build a new factory that would build three of its new cars and add up to 1,000 new jobs at its Norfolk home base in Hethel, its chief executive told the Financial Times.

The news came as the niche sports car maker announced plans on Tuesday to build its first city car, the Ethos, from 2014, bringing to five the number of models it plans in an ambitious ?500m expansion over the next four years.

The car will be developed jointly with Proton, the Malaysian carmaker which owns Lotus.

It will be sold under the Lotus brand in Europe and Proton?s in Asia, the company said.

Lotus is seeking the government grant to build a new production facility for the Ethos and its planned Elite and Eterne models – all front-engined cars which its current facility is not equipped to build.

Dany Bahar, the Lotus chief, said it would apply next week for the grant from the government?s ?1.4bn regional growth fund, set up to support jobs in areas largely dependent on the public sector for employment.

He said the new facility would employ 600 to 1,000 new people, depending on sales.

?If we can help to grow the economy, we?re absolutely happy to provide 600 to 1,000 new jobs in manufacturing?, Mr Bahar said.

?Unfortunately, in our business plan, we don?t have capital investment to build another new factory.?

If Lotus were unsuccessful in securing government aid, it plans to build the cars at contract carmakers Magna Steyr in Austria or Valmet in Finland, Mr Bahar said.

Lotus last year announced a major expansion out of niche lightweight sports cars when it unveiled five models at the Paris auto show, part of a bid to enter the league of supercar producers.

The company has since postponed plans to build its proposed Elan model, because customers said it was too similar to the existing Esprit.

Mr Bahar also said that Lotus would shift production to the continent if it failed to secure government aid.

The carmaker failed to secure funding for the proposed new factory in the first, oversubscribed tranche of the regional fund, in which Nissan, Jaguar Land Rover and Bentley all received conditional offers.

The Department for Business, Innovation and Skills said of the expected application from the carmaker: ?We have been talking to Lotus about it and welcome an application from them for the second round.?

Lotus has a rich past of racing victories and a respected engineering division. Its cars appeared in The Spy Who Loved Me and Basic Instinct, when Sharon Stone raced an Esprit on winding roads in California with Michael Douglas in hot pursuit.

Although the carmaker sells fewer than 3,000 cars a year, its stand at last year?s Paris auto show, when it unveiled the five new models, was one of the most written about and visited at the exhibition.

However, the company has struggled financially since its glory days, losing money in most of the years since Proton bought it in 1996. Mr Bahar said Lotus had now secured the funding it needed for its planned ?500m expansion over the next five years.

Of this amount, he said, ?270m would come from a syndicate of Asian banks and another ?120m from Proton. The remaining cash, he said, would need to be generated from revenues from the carmaker?s new products in the last two years of its business plan.

On Tuesday, a year after its announcement of a ?new era?, the company opened a refurbished ?3m test track at its headquarters, which was inaugurated by Nigel Mansell, the former Formula One racing driver.

Lotus showed journalists plans for a site expansion that would include a museum and visitors? centre.

In the motoring press, commentators tend to mix awed reviews of the company?s cars with scepticism over its ability to remain financially viable.

Mr Bahar acknowledged ?negative and cynical? comments from the motoring press about the company?s prospects but said of its plan: ?We are very confident, and we are very much on track.?

? The Financial Times Limited 2011