This article is from the Lotus Cars FAQ, by firstname.lastname@example.org (Alan F. Perry) with numerous contributions by others.
The real answer is known by a small number of people, including Colin
Chapman's widow Hazel, but no one is telling. Of course, this does
not stop people from speculating. Here are some theories from Mike
a. Lotus fruit - the Oxford Concise says "fruit represented in ancient
Greek legend as inducing luxurious dreaminess and distaste for
active life". Working on the car certainly had the same effect.
b. Lotus flower - a different plant to the above, used symbolically
in Hinduism and Buddhism. Nice name if you're going to chose one
without a specific connection to what you're doing.
c. The reverse of "Us lot", apparently a favorite phrase of Colin
There is some suggestion that Hazel Chapman actually came up with
the name Lotus.
One theory that is usually dismissed from the days when Colin Chapman
was selling cars. The British government was rationing fuel and stopped
issuing gasoline rations so people weren't buying cars. Colin Chapman
started his career as a car builder with one of these unsold cars. Some
people think that "Lotus" came from the phrase "LOT UNSOLD" or "LOT U/S".
The following story on this topic was posted to alt.fan.colin-chapman
by Nori Saitoh (email@example.com):
I found a little story about ... why "Lotus" in a non-fiction
titled "Formula One: A Dream on the Earth" by Yasuhisa Ebisawa
(written in Japanese). The book was about Honda's Formula One
Grand Prix activities from the early 1960's to 1986.
It was summer of 1963 when Honda was looking for a partner in
Europe to join F1 Grand Prix Circus as an engine supplier in the
1964 season. Then Team Manager Yoshio Nakamura was visiting Cooper,
Brabham and Lotus to talk about a possible partnership. After
Nakamura has gone back to Japan, Colin Chapman visited Honda in
Tokyo and agreed to use the Honda engine for his team's second car
After discussing the plan, Nakamura invited Chapman to a night club
for a drink, where Chapman explained why he had named his cars "Lotus."
He said he was interested in Asian Philosophy when he was in college
and knew Lotus flower is a symbol for Nirvana in Buddhism. (A statue
of Buddha usually sits on a Lotus flower.)