The happy bout of price-cutting in which Lotus have chopped almost £4000 off what they ask for a Turbo Esprit encompasses the standard Esprit too. At a stroke, the price of the standard 138mph mid-engined Lotus has tumbled almost £2000. Better still, Lotus have switched the Esprit on to the Turbo's superlative chassis, and improved it in other ways to create what they call the series three Esprit to carry the new £13,461 price tag.

Indeed, it's the upgrading of the basic Esprit to what is essentially Turbo specification that's the key to the reduction in the prices of both models. The rationalisation of componentry, and body and chassis tooling and construction, has created what Lotus say are 'considerable in-house sayings which are reflected in the unit cost and the market price'.

If all this seems rather strange since the Esprit was around for a long time before the Turbo arrived, then it's vital to remember that the Turbo isn't simply an Esprit with a bolt-on-turbocharger: it was developed as a carefully redesigned and fully developed model in its own right, with different bodywork for greater aerodynamic efficiency and a new more complex chassis to handle its extra 50bhp and 150mph top speed. Whereas the standard Esprit (running from 1975 original through the series two of 1978 to the series 2.2 introduced at the same time as the Turbo a year ago) had a unique front suspension, the Turbo was given the front box section and suspension used in the Eclat and Elite, so that – engine apart – the Turbo enjoyed more commonality with the other Loti than the S2.2. The result was that the Turbo was a more desirable car than the lesser model for more than just its outstanding performance. The combination of roadholding, handling and ride stemming from its chassis inspired us to say that it, the Turbo, elevated the mid-engined car to a new plateau; now the standard 160bhp Series Three Esprit has that chassis too.

The differences are that the front mounts are 1in wider than in the old Esprit chassis and at the rear there's a space frame engine and transmission cradle that gives the drivetrain a more desirable wide-based four-point mounting system, for better control and suppression of vibration and noise, and more torsional stiffness. With the old Esprit chassis, the driveshafts were active suspension locating members; the Turbo and S3 have plunging driveshafts and proper transverse upper suspension links, of different length from the lower links and not parallel with them. There are also bigger aluminium hub carriers; attached to them, to provide the fore and aft location, are the familiar long, angled radius arms. All suspension loads are thus fed directly to the chassis, instead of partly through the engine. The chassis is, of course, fully immersed in a galvanised zinc dip and guaranteed against corrosion for five years.

The ventilated front brake discs have been ditched in favour of bigger solid discs that provide better feel and life. The inboard rear disc brakes are unchanged. Importantly, the Speedline alloy wheels now carry Goodyear NCT tyres. 205/60VR14 at the front and 205/70VR14 at the rear. The BBS wheels offered on the Turbo, and carrying 195/60VR15 NCTs at the front and 235/60VR15s at the rear, are optional. Careful development work by Goodyear and Lotus engineers has made the NCTs particularly well-suited to the Esprit (initially, Lotus found the NCTs too harsh, noisy and to have rapidly deteriorating wear characteristics, all now overcome).

The S3 looks slightly different from the S2, neater and meatier. It has a new wraparound front and rear bumpers, restyled sills, a new rear number plate housing, new airscoops behind the quarter windows and new graphics. The new front bumper, and work beneath the car, improve the drag coefficient to 0.33, Lotus claim.

The engine bay and housing have been redesigned to provide direct cooling airflow that works – through natural convection – even when the car's standing still, thus reducing heat build-up. There's improved service access and oil and water top-up facilities. Other than a quieter new induction system and more efficient exhaust incorporating flexible joints, the engine is the 2.2-litre unit – dubbed the 912 – introduced last May (the 2.0-litre was the 907, the Turbo is the 910 and the Sunbeam Lotus engine is the 911 – is has a different main bearing casting, sump, oil feed, carburation and ignition from the 912 as used in the Esprit, Elite and Eclat). Power is 160bhp at 6500rpm and torque 160lb/ft at 5000rpm.

Most important change to the Esprit's cabin has been the installation of a new sound insulation barrier which has cut interior noise by a whopping 50 percent, but the seats have also been revised to improve support, comfort and headroom. Standard trim is a new cropped velour, with leather a £664 option. The instrument lighting has been improved and there's a new smaller-diameter leather-bound steering wheel. The cabin has more visual appeal than ever, and it takes only a few moments to discover that the revised seats do indeed make it more comfortable. It's a snug, welcoming place; genuinely plush and impressive.

Start driving, and the benefits of the new sound deadening are immediately obvious – and very welcome. Lovely as it always felt, the Esprit was not quiet. Now, it is a notably refined car, easy to drive, delightful to handle, relaxed and cosy to be in. There is still enough engine noise to make it obvious that you're in a mid-engined car, but it's quite subdued even a high revs so that the S3 gains more of a truly expensive and very well-sorted touring car stature than it had before. In league with the clean, flexible performance and superb roadholding and handling, the new-found refinement makes for an exotic-looking two-seater that glides along the road at a truly worthwhile clip while retaining exceptional composure. Now, it cruises as quietly as most reasonable saloons.

So there's a new element of sveltness about the Esprit; an extra element to its ability. Indeed, its fundamental capability – to go very quickly from one point to another, and to provide great driver pleasure while doing so – is itself raised to a new level by the change of chassis, tyres and brakes. Softer spring and damper settings than those of the Turbo mean that the S3 has a more absorbent ride than the top Esprit and that is doesn't have quite the same staggering degree of roadholding. Even so, the S3's grip is outstanding and it takes some effort to get it out of line. Essentially, the Esprit now has more roadholding, better handling, better braking and a better ride than ever before. Although it's overshadowed by the Turbo, performance is still remarkable for a car of its capacity – 0-60 in 6.7 sec; 40, 60, 88, 120 and 138mph in the gears – and it's easily able to return consumption figures in the mid to high 20s.

It's true that Lotus needed to reduce the noise of the Esprit, and it was logical that they should have brought the S3 and Turbo into line on the line. The result is an apparently thorough and measurably worthwhile piece of running development, that, coupled with such an extreme drop in price, makes the Esprit more desirable than ever.