Nissan Motor said it would start building its zero-emission Leaf electric car at its British plant from 2013, saving more than 2,000 jobs in one of England's most deprived regions.
The factory in Sunderland, northeast England, will also make the vehicle's lithium-ion batteries and will be the third earmarked to produce the clean cars after plants in Oppama, Japan and in Tennessee.
The investment of more than 420 million British pounds (US$642 million) will help maintain about 2,250 jobs at Nissan and across its British supply chain, the company said.
British Business Secretary Peter Mandelson said: "This investment is a fantastic vote of confidence in the Sunderland plant and its excellent workforce." He said that "by working together we can achieve our aim of making the UK a world leader in ultra-low carbon vehicles".
Initial output will be about 50,000 vehicles a year from early 2013. The Leaf is due to go on sale worldwide this year with production beginning in Japan, while the U.S. factory will start making them in 2012.
Nissan bills the Leaf electric vehicle (EV) as "the world's first affordable, mass-produced zero emission car". The five-seater hatchback has a range of 160 kilometers (100 miles), can be rapid-charged to 80% of its battery capacity in 30 minutes, and travels at a top speed of more than 140 kilometers (90 miles) per hour.
The Sunderland car plant, Britain's largest, has since 1986 produced 5.6 million vehicles, including 338,000 last year, with a workforce of 4,100.
In January, Nissan said it was shedding 1,200 jobs at the plant as it battled to cope with a downturn in sales caused by the global economic crisis, worsening joblessness in England's worst unemployment black spot.
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