Caterham's history is tightly related to that of Lotus, as the first evolved from the former. In 1957 Colin Chapman, founder of British sports car manufacturer, Lotus, launched at that time's London Motor Show the Lotus 7 model.
This was the design of an open-top lightweight sports car that registered great success in Britain due to its affordable price and race-like nimble handling. The car turned into a hit and Colin Chapman continued work on Lotus' 7 sports car project. In 1959 Graham Nearn’s Caterham Car Services was appointed a Lotus 7 dealer and in 1960 the Lotus 7 Series 2 was released.
The car retained its original design and concept, as all future Caterhams will too, and featured in the 1967 TV series "The Prisoner". This brought a general attention to the 7 sports car and soon after many different car makers strated using the Lotus 7 platform for other variants of the sports car.
1968 saw the release of the Series 3 and in 1970 the Series 4 was unveiled. In 1973 when Lotus announced they will cease production of the 7 model, Graham Nearn purchased the rights for the car and continued production of the Series 4. However, because of its less popular impact, the new company named Caterham switched to the Series 3 production.
In 1984 the company released its first Starter Kit, meat for people who wanted to build the car themselves and save money. The idea proved a successful one, at least in the United Kingdom, where the Caterham 7 cars can be bought as a CKD, complete kit to be built by owner, to this day.
In 1987 the production and administration of the company moved from the town of Caterham, Surrey to a new factory in Dartford, Kent, UK. In 1989 the company built a Prisoner special edition Caterham, while in 1992 the car set a new record for a production vehicle 0-100-0 time with a 250 hp 2.0-liter Vauxhall engine.
Caterham did come up with a covered model in 1994, which was the 21 roadster. Although the car received favorable reviews form the British auto magazines and had an interior finish and built quality exceeding the Lotus’ and even TVRs of the mid 90s, Caterham abandoned the project and returned to its Series 3 chassis. Only 48 Caterham 21 model cars were ever built, making them future exclusive collectibles.
In 1993 the six-speed manual gearbox was introduced along with the "7" grille that became present on each model ever since. In 2005 the Nearn family sold the company that is now led by a new management team led by Ansar Ali, formerly of Lotus.