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Lotus has changed its decision to cease car manufacturing in the UK after the government indicated a willingness to support the struggling British sports car maker.

On Saturday, Lotus, owned by the Chinese automotive company Geely, released a statement saying it is “actively exploring strategic options” to enhance the efficiency of its operations and increase its competitiveness on a global scale.

“Lotus Cars is continuing normal operations, and there are no plans to close the factory,” it said.

The Financial Times had reported on Friday that Lotus was considering halting production at its Hethel facility in Norfolk, which could jeopardize 1,300 jobs.

Two people with knowledge of the situation said UK government officials contacted Lotus and Geely executives shortly after the report was published. “Everyone just panicked,” said one of the people.

UK business secretary Jonathan Reynolds is expected to speak to Lotus on Sunday, one person close to the government said.

A government spokesperson said: “The government does not comment on speculation or the commercial affairs of private companies.”

Geely declined to comment.

A shutdown of the Hethel plant would have dealt a fresh blow to UK car production, following closures by Honda and Ford over the past decade.

In a bid to boost automotive and other advanced manufacturing Prime Minister Sir Keir Starmer has promised to reduce high energy costs as part of the Labour government’s recently unveiled industrial strategy.

On Friday Lotus said it had paused production in the UK from mid-May to manage inventories and supply chain issues related to US tariffs after it suspended shipments of its Emira sports car to the US.

But people with knowledge of the discussions said the company had struggled to pay its suppliers in recent weeks and it was suffering from low vehicle demand and increasing inventories, which have put pressure on both its Hethel plant in the UK as well as the Geely-owned plant in Wuhan, China, which makes Lotus cars. 

“They’re facing problems that are deeper than the US tariff issue,” one person close to the company said.

Lotus did not immediately respond to an FT request for comment.

Feng Qingfeng, chief executive of US-listed Lotus Technology, which has a controlling stake in the UK business, told senior executives earlier this week to draw up a proposal to pull out of manufacturing in the UK. He also told investors that Lotus wants to localise production in the US.

Lotus has cut jobs in recent years while a number of senior executives have left, including its European chief Dan Balmer and chief commercial officer Mike Johnstone. 

In the three months to June Lotus Technology reported an operating loss of $103mn, compared with a loss of $233mn a year earlier, while it delivered 1,274 vehicles, down 42 per cent. 

Its Hethel plant, which was established in 1966, has annual capacity of about 10,000 cars while its Wuhan plant can produce about 150,000 vehicles.