There are numerous reports about Jaguar working on a brand new sports car, with some speculating that the car will be a mid-engined supercar to take on the likes of the Audi R8, while others claim it is more likely to be a lightweight roadster designed along the lines of the Porsche Boxster or BMW Z4. According to inside sources, this second theory is the more accurate one.

Speaking with AutoWeek at this month’s Detroit Auto Show, a Jaguar insider revealed that the company is looking at launching an affordable, front-engined sports car to be called the XE. Last September it was revealed that Jaguar had actually registered the XE title as a trademark in the UK, however, the insider explained that the project had not been given a final sign off yet.

If given the go ahead, the XE is expected to be launched around 2012 or 2013 along with the replacement for the XK. Supporting the project is the boss of Jaguar’s new parent company, Ratan Tata, who has voiced enthusiasm for an entry-level Jaguar sports car even before he had bought the company.

In Jaguar’s more immediate future is the launch of the next-generation XJ flagship next year as well as a diesel-powered XK.