The city is applying for a $27 million federal TIGER 6 grant for a $52 million complete reworking of the narrow Wilcox Tunnel through Missionary Ridge.
The project would leave the current tunnel in place for westbound traffic with a single lane and build a new two-lane tunnel for eastbound traffic.
There would be an emergency egress cross passage between the two.
Final design would be completed by next February with construction starting a short time afterward.
Officials said the tunnel carried up to 18,000 vehicles per day.
The city said the need for the improvement has been heightened by increased traffic heading to the Volkswagen and Amazon plants.
The applications say a number of disadvantaged citizens live nearby and rely on the tunnel.
Buses have not been allowed in the tunnel since August 2009.