• Nov 23rd 2010 at 2:57PM
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Lotus sent a cryptic missive last year indicating it wanted to challenge Porsche and Ferrari. Aiming at those targets, it pulled the trigger five times at the Paris Motor Show this year, unleashing the new Elise, Elan, Esprit, Elite and Eterne showcars. Then came the name for the project, "The Metamorphosis," and its tidings of a new era. Yet behind all the modern interpretive art, there are the simple nuts and bolts of getting a car company into a new place. Follow the jump to find out what we learned.

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The Problem: The Elise

"The last 15 years the brand has maneuvered itself into a corner where it served a niche, the enthusiasts," says CEO Dany Bahar. "That's why Lotus was always on the verge of financial collapse."

The Lotus Elise has played a prominent and double-edged role in both the success and the difficulties of the British company.

"We've sold more than 45,000 Elises," Bahar tells us. "I wouldn't say it [has been a] problem, but since it was a very successful car the Elise has defined what Lotus is today."

It isn't that Lotus is trying to get to new ground – it's trying to get to ground it abandoned.
Lotus founder Colin Chapman's lightweight-above-all mantra is a cornerstone of the company, and while the Elise maintains, it hasn't left the brand enough room to maneuver with mainstream sports car consumers. The brand's reputation made people look askance when it talked about building what, by Lotus standards, would be a big, heavy sports car.

The Lotus Metamorphosis is about taking that ground back. "It's not wrong that a car weighs more than 1,000 kilograms," said Bahar. "It's not wrong that a car is longer than three meters or has a V8."

When Lotus announced its intentions to go the luxury sports car route last year, people were wary, but the company wants to remind everyone that the position isn't new. When Bahar looked at 150 magazines from the '70s, '80s and '90s, he found the Esprit was always compared to Porsche, Ferrari and Maserati. It isn't that Lotus is trying to get to new ground – it's trying to get back to ground it abandoned.

That's why when Bahar was asked if he knew who the template was for the new Lotus customer, he immediately answered, "The Porsche customer."

With the Stuttgart firm going more mainstream practically every quarter, Lotus sees a chance to bring individualism and small-volume character to a space that Porsche, by its sheer ubiquity, is leaving. In fact, the reasoning is similar to what another English automaker planned to do a few years ago with a coupe called the Vantage V8.

"Maybe Porsche's aspirational customer," Bahar said, "comes to Lotus."

Lotus Lineup

The Cost of Metamorphosis: £770,000,000

Bahar said that the plan has only properly been in the works for about the last 12 months, and the banks have handed over £770 million pounds ($1,243 billion U.S.) to pay for the chrysalis act. Those come off as fly-by-night numbers and a tiny bit of coin when one considers traditional development budgets for five cars, building out the new facilities and infrastructure, and the advertising and marketing needed to seed and grow the new brand consciousness.

The two caveats in Lotus's case are that the five cars – Elise, Elan, Esprit, Elite and Eterne – are only 2.5 cars in engineering terms thanks to extended modularity and shared components. Also, according to Bahar, the development budget for a small maker like Ferrari or Aston is just £100-£150M per car, and he says Lotus is in that range.

"If you do nothing, it's death, if you pump in a massive investment it's maybe death."
The point of coming out with five cars was to spread the risk. "Today we sell niche, small cars," said Bahar, "2,500 to 2,700 cars per year – not enough to keep the company alive. There were two ways to do it: build two cars and sell as many as possible, and we don't think we can sell enough of two cars. The other way was to build more cars. It's more conservative, but it's more expensive up front."

"You're spreading the risk with more cars," said former GM man Bob Lutz, who's on the Lotus advisory board. "It is a gamble. When you have a brand that was kind of fading, as Lotus was, if you do nothing it's certain death, if you pump in a massive investment it's maybe death. But the investment is a tiny fraction of what it would cost GM to do this" with the modular vehicle architecture and massive differences in costs between things like carbon fiber tooling versus steel tooling.

"We're only talking about a certain volume," said Lutz. "It will be feasible or close if they can do that without spending a fortune. I personally give this a substantial chance of success."

They also have an eye on selling the platforms and engineering to other automakers as a way to defray costs. Lotus Group's engineering arm has 700 engineers, three times as many as Ferrari according to Bahar. They make up more than a third of the company's 2,000 employees, and they work for third parties including every single OEM. So not only the platforms that the Group develops, but the galaxy of engineers will also contribute to the bottom line.

"We have three engines to choose from, from a four-cylinder to a V6 or V10 with our long-standing relationship with Toyota. Or we might develop our own."
If we take the company at its word and, on the high end, Lotus is investing £450 million just for the cars, where's the other £320 million going? To build the back end of revenue generation, said Bahar: "investments like the proper management of licensing and merchandise," a new headquarters at Hethel, a new and more demanding test track, new motorsports facility, new Lotus heritage center, and general improvements to the Hethel site "to make it more representative of Lotus in the future."

Bahar let dangle a question about engines, though. Naturally, no one at Lotus would be drawn out on specifically which engines we can expect to see in the future, but he said "We have three months to decide. We have three engines to choose from, from a four-cylinder to a V6 or V10 with our long-standing relationship with Toyota. Or we might develop our own."

We'd be surprised if Lotus risked funds right now to develop its own engines, especially when there is so much potential with just the possibilities we know about.

"The funding is in place," he said. "We have to fight about delivering."

And by investing in everything now, in a market that remains depressed, the company expects to be loaded and ready when things rebound.

Win on Sunday...

Perhaps you noticed that motorsports wasn't mentioned as a cost to be taken out of the £770 million budget. That's because motorsports is now viewed as a profit center, not an account payable. Lotus is, however, putting money into facilities for its motorsports efforts, like a 5,000-square-meter factory and its FIA-certified test track at Hethel.

"Funds all went to racing before, with Colin Chapman," said Bahar, which is why customer cars could be left to want for development. "Now motorsports has to make a business case beforehand. You need to have teams lined up to buy the cars before you commit to racing – GT2, GT4, Le Mans, Exos, it's a profit center."

Claudio Berro, who headed Ferrari's race efforts before coming to Lotus, is now the English firm's motorsport director. He believes that having a car like the Evora in GT4 "shows the potential of the road car, since 80% of a GT car is the production car."

Beyond that, plans are expansive: next year there will be two or three cars in IndyCar, and in 2012 the series will use Lotus bodywork, plus a closed-cockpit American Le Mans challenger, GP2 and GP3 programs, an Evora GT2 endurance racer, and the renamed Lotus Cup in the U.S., UK, Italy, Middle East, Japan and Eastern Europe with between 40 and 50 cars in every one of the Cup series.

To manage the task, Lotus is bringing all of its motorsport activities back in-house – hence the Lotus Racing snafu with Tony Fernandes' F1 team, which Lotus had no comment on.

The New Lotus: 6,000 to 8,000 Annual Sales

The team that Bahar, who headed Ferrari's marketing before taking the Lotus position, has built includes quite a few of his former Ferrari colleagues. Still, he poached from other hallowed marques, such a acquiring Michael Och and Erik Ruge from Porshce and Chief Technical Officer Wolf Zimmerman, who spent 19 years in the same position at Mercedes-Benz' AMG division.

And in effort to make sure they didn't simply get high on their own ideas, the company's new advisory board includes Tom Purves formerly of BMW and Rolls-Royce, ex-BMW R&D chief Burkhard Goeschel, auditing firm KPMG, and Bob Lutz, who "eagerly accepted" his position once General Motors determined that Lotus wasn't a competitor.

The emissions part is a crucial platform in the metamorphosis.
Lutz's take on the company's plans: "It's a complete departure from where Lotus has been – I think there have been some weak points from a product standpoint. What the company wants to do is break through and become a much more engaged participant" when it comes to this end of the sports car segment.

"For the first time the company has the funding to do the kind of cars that other manufacturers can only dream of," Lutz continued.

In 2015, when all five cars are meant to be in showrooms and on the market, Lotus expects volume to be between 6,000 and 8,000 cars per year, which means they'd only need to sell 1,600 each of the five they've introduced.

The ethos of those cars, beyond the core tenet of performance through light weight, will be "about the interaction of driver and car," said Bahar, "fun to drive, great ride and handling and innovation – British products of ultra high performance and best in emissions."

The emissions part is a crucial platform in the metamorphosis. Zimmerman, the chief technical officer, says, "We believe hybrid systems will be the future. It doesn't need to be a full hybrid. Our benchmark is to be lowest in class" in emission, somewhere around the 200 g/km mark that represents between 20 and 30 miles per gallon.

The "next generation of cars," he said, "will match, if not exceed, competitors in sports and supercars with performance, design, technology, and emissions."

One of the biggest question marks outside the company, though, is where you'll buy them. Lotus terminated its entire dealer network in Europe and is working through the process of restructuring its American distribution system. Bahar said the process is about 60 percent complete, and that only about 10 percent of current Lotus dealer network will hold on to their franchises.

Stay tuned for part two of the Lotus Metamorphosis, where we'll get into all the details of the cars those dealers will be offering.

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    • 1 Second Ago
      • 4 Years Ago
      I like the new designs. They don't look like bad kit car versions of Miura's.
      • 4 Years Ago
      Well, I'm getting in line. I'll consider swapping my Vantage V8 for an Elan. Gotta see one in the flesh.

      I'd say they need to be light, but not necessarily the lightest of all. They need to perform as good or beter than the competition. Thats the key.
      • 4 Years Ago
      I understand that Lotus can't survive just building Elises for niche enthusiasts, but they need to think a little harder about what a re-imagined Lotus looks like, because all of these 5 designs look blatantly derivative and like amalgamations of Ferrari, Lamborghini and generic supercar cues. Lotus has always been the individualist's choice, and these designs are not unique or individual in the least.
        • 4 Years Ago
        Works fine for Porsche...
        • 4 Years Ago
        Exactly. Porsches have never been exclusive or exotic, with the exceptions of the Carrera GT and a few other models, so Lotus needs to figure out how to maintain their exoticness while luring Porsche buyers.
      • 4 Years Ago
      Bye bye lightness
      • 4 Years Ago
      Their dealer network was probably their biggest problem, so it's good that they are rebuilding it.

      The nearest Lotus dealer was 250 miles away, felt sketchy, and acted like snobs. The nearest Porsche dealer was 7 miles away and rolled out the red carpet when I showed up in beat-up jeans. Guess what brand of car I own.
      • 4 Years Ago
      Even though I strongly oppose the direction of Lotus from an enthusiast's standpoint, one has to understand the business aspect of the move. And I'm sure they will still one day be able to build a super-lightweight car for the purists aside from the other 5 behemoths (relatively speaking).

      I also actually really like the aesthetic look of the concepts.
      • 4 Years Ago
      these new concepts are absolutely stunning! I cant wait to see what becomes of them when the actual production models come through. The Esprit has been away from the public for far too long. I cant wait to see a fresh, Big engine MR car from Lotus again!
      • 4 Years Ago
      I am not a fan of the new design of the Lotus Elise. The others remind me of Mclaren MP4-12C's, Lamborghini's, and Ferrari's. They tried to create something new for themselves by making generic sports cars that will increase their presence in the automobile market. Needless to say, they did not create anything new. Lotus designed a series of new automobiles that are essentially good-looking Porsches. They are light, efficient, fast, and boring. My only hope is that they rethink their decision before they go and destroy what Colin worked so hard to create.

      I am fifteen years old and am a Lotus-phile. I would do absolutely anything to be able to drive an '05 Elise and I know that in my generation, Lotus is becoming more of household name because of their perseverance with the tried-and-true Elise/Exige format. My solution to Lotus' problem is either a partnership with a new company, or an ad campaign in the States that showcases an Elise with a more efficient, twin-turbo charged, 2.0 liter 4 that makes ~280 horse with a revised intake and exhaust. I realize they would have to redesign the engine bay and cockpit, but a faster, more efficient Elise is just what an American wants, and I'm sure that the Brits wouldn't mind a better power to weight ratio than the astounding Elise has now.

      I think this to be a good solution to the company's problem that wouldn't take four years to administer to the general public. It would have to be a bit different than the Elise is now, it would probably have to have nicer seats and easier ingress/egress (and maybe a nav system standard) but I think that is the price we have to pay for the survival of the best car company ever. I guess I am riding on all of you Lotus executives to realize that you can't reinvent a car that is already great. You can update it, add new technology, add a hybrid to your line-up, and slightly change the styling every 2 to 4 years, but you can't take an amazing car and rape it, take its bastard child to sell to everyone, and still expect it to be accepted.

      Sorry, I think I am done now. I pray that you don't make a mistake Lotus. You only have one chance.
      • 4 Years Ago
      I agree the styling is way too derivative and not fresh at all. The first thing I think of when I see these cars is not Lotus but Lambo and thats not good IMO. They need to design a series of cars thats clearly Lotus. Also, I think if they use Toyota mills in their cars no matter the displacement or cylinder count it will turn Porsche prospects away. If they have 3 times the engineering staff as Ferrari then they should have plenty of individuals with a tremdous depth of knowledge to make innovative engines. If they want to use Toyota as an engine source then they need to look below Porsche and aim more at the Corvette and its price point.
      Overall, what I have read is not encouraging at all.
        • 4 Years Ago
        The Elise WAS sold at the Corvette price-point. That idea didn't work out so well for them.
        • 4 Years Ago
        So going up market is miraculously going to solve this?
        • 4 Years Ago
        Unless they use the V10, then the Esprit could be a bargain compare to the LFA.
      • 4 Years Ago
      Lotus who? I hope they manage to pull this off, but it's wildly optimistic, and more so given the flagging economy. Current offerings are unequaled performers, but lack fit and finish and appeal to a limited audience. How do they go from Elise/Exige/Evora to the very pricey 'new' line-up without building up a solid customer base? 118K for an Elan, which is basically a 911 competitor? They are approaching 911 turbo territory, and had better deliver some very polished kit if they hope to sell more than a handful.
      • 4 Years Ago
      Ok.. I own 3 toyota's -

      2 Prius' & MR2 Spyder. (poor mans lotus - 2075 lbs and still loosing weight :)

      while Toyota at 1 time had the most advanced engines..they are severely lacking recently.

      It's ashame lotus is saddled with their engines.

      Can you guys imagine a Lotus Elise with one of the following engines:

      The Old SRT4 Engine - 230hp (def underrated)
      Or a Turbocharged Ecotec from GM.

      They could have easily outperformed the Toyota Mill that they had to develop a supercharger for. The thing still has no torque compared to those 2 engines.

      Also the Evora - The Toyota 6 is decent - but you could have still stuck with the same 4cyl turbo engine as the Elise with a simple tune (both Mopar and GM offer kits to take their engines to 300hp).
      This would have reduced weight.. made the balance nicer and been just as effective as the Toyota Mill.

      They also could have went with a Nissan VQ motor at 3.7 liter and gotten an easy 350hp from it.

      I love what Lotus stands for and I hope that they can continually push the envelope. Someday once the mortgage is paid off I will be in the market for a 911 turbo (off lease) or possibly a Lotus of some kind. I still think I'll keep the spyder as the autocrosser though.
        • 4 Years Ago
        I agree, Lotus should have used another engine. Though they did use Toyota's engine for weight purposes, and I'm sure they had good reasoning. Maybe the new Ford 2.0L Eco-Boost?
      • 4 Years Ago
      "The Faaaaaaail Boat, soon we'll be making another run."
        • 4 Years Ago
        Thank you for your educated, well-formulated response based on decades of business knowledge and experience.

        Oh wait.

        Anyone can see the brand is positioning itself well. The question is, once the bait is out there, will the consumers take it?
        • 4 Years Ago
        This is all great and inspiring but it means nothing if I can't cross shop a Lotus with a Porsche and drive it home.
        • 4 Years Ago
        This is all great and inspiring but it means nothing if I can't cross shop a Lotus with a Porsche and drive it home.
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