The chassis featured a lower monocoque than the 97T as a result of a regulation change stipulating a reduction in fuel capacity to 195 litres. The powertrain consisted of the new Renault EF15B turbocharged V6 engine, driving through a manual transmission by Hewland.
The EF15B appeared in two forms: the standard engine and the "D.P." engine, which featured pneumatic valve springs for the first time. At the end of the season, Renault introduced the revised EF15C, which added common rail fuel injection and much-revised water cooling through the cylinder head to reduce the likelihood of pre-ignition. Power figures for this period are largely speculative, as engine manufacturers admitted testbeds lacked the rating to measure output above 4-bar boost. It is claimed the Renault EF15B produced in excess of 1000 HP at unrestricted boost pressure during qualifying, making it one of the most powerful engines in Formula 1 history. In race trim, engines produced around 900 HP, which was the maximum the unit could cope with over a race distance.
The gearbox came in two variants: a conventional five-speed and a new six-speed. The six-speed was a development gearbox and was largely unreliable. While Senna opted to run only with the five-speed, Dumfries was tasked with testing the six-speed. Both gearboxes featured Hewland internals within a Lotus-designed casing. Other notable innovations included a two-stage ride height adjustment, water injection through the intercoolers, an early form of barge board, and an advanced fuel consumption microcomputer.
At the end of 1985, Elio de Angelis left Lotus to join Brabham. Lotus intended to replace him with Derek Warwick, but Ayrton Senna did not believe the team could sustain two number 1 drivers and did not want the focus of the team to be on anything but himself. Senna put pressure on Lotus not to sign Warwick, and to instead sign his fellow countryman, Maurício Gugelmin, as a number 2 driver.
The team bowed to Senna's demand regarding Warwick but signed Johnny Dumfries rather than Gugelmin, as long-time sponsor John Player reportedly wanted a British driver. Warwick subsequently replaced de Angelis at Brabham following the Italian's fatal testing accident at Paul Ricard, while Gugelmin did not appear in F1 until 1988.
The 98T was the final Lotus powered by a Renault engine. During the 1986 season, qualifying spec engines were pushed to their absolute structural limits for maximum power and quick lap times, typically lasting only a couple of clean laps. While the car was highly powerful, the six-speed gearbox variant tested by Dumfries proved unreliable. Senna secured multiple pole positions during the season, though reliability issues hampered his race results.
The 98T was the last Lotus car to carry the famous black and gold colours of John Player. With Renault withdrawing from F1 at the end of 1986, Lotus reached a deal to use Honda engines for 1987 and 1988. As part of this agreement, the team signed Honda's official test driver, Satoru Nakajima, as Senna's teammate for 1987. John Player, still wanting a British driver in the team, subsequently pulled its sponsorship because the team did not retain one, and the brand was replaced by Camel.