Audi plans to build a "baby" TT that will challenge the Lotus Elise, according to AutoExpress magazine. The lightweight roadster is expected to be shown before the end of the year, the report says. It is being built with the help of KTM, an Austrian motorcycle maker. Designed to major on driving thrills, the newcomer will be highly exclusive, with only a limited number of examples planned.

KTM first contacted parent company Volkswagen about building a roadster, but since VW was already developing the GX3, the KTM proposal was shifted to Audi. The possibility of a KTM-Audi partnership was first revealed in January.

A car is actually under development. KTM is reportedly delegating such tasks as sourcing a carbon fibre chassis from other motorsports partners. The car is expected to have similarities to the VW EcoRacer Concept (link below). It will weigh around 1,600 pounds and get about 50 mpg, AE reckons. It should have a sub-six-second 0-60 time.

Because the firm's designers are more used to producing large, luxurious models, they've got together with an unlikely partner to help work on the two-seater. That collaborator is Austrian motorcycle manufacturer KTM, which is playing a lead role in the development of the new model, due before the end of this year. KTM describes itself as the instigator of the sports car project, which bosses initially pitched to both Audi and Volkswagen. However, VW already has the three-wheeled GX3 under development at Lotus, while there's also strong internal support for the four-wheeled EcoRacer roadster - which debuted at last year's Tokyo Motor Show - so top brass declined KTM's invitation.

Fortunately, because Audi saw the potential of the motorbike firm's idea - and the possible cost savings offered by a technology share with Volkswagen - it grabbed the development opportunity with both hands.

Chairman of Audi's board Professor Dr Martin Winterkorn has already commented on the project. He said: "KTM is very interesting. We will show something at the end of the year."

So what will KTM have to offer to Audi? The bike manufacturer is already in talks with race car builder Dallara about a carbon fibre chassis, and is partly owned by quad bike specialist Polaris. It's not yet known which company will be responsible for the production of the sports car, but it is sure to use Audi powerplants.

Buyers can expect the newcomer to adopt the VW Group's latest TSI turbo and supercharged technology. Economy will be a priority - a main reason for introducing lightweight, low-volume cars into any maker's range is to bring down the average fuel consumption and emissions for its entire line-up.

However, a likely sub-750kg kerbweight means thrilling performance will come as standard, too. Matching the larger TT's pace, the new Audi will sprint from 0-60mph in less than six seconds, while returning in excess of 50mpg.

The biggest question remains over the transmission. Audi's current range is either front or four-wheel drive, but feeding power to the rear would be most suitable for a lightweight sportster.