Tata Group on Wednesday announced an investment of 4 billion pounds (about Rs 42,500 crore) in setting up a flagship factory to make batteries for Jaguar Land Rover as well as other manufacturers.
Tata Sons, owner of JLR, chose Bridgwater in Somerset in southwest England for the gigafactory over a rival location in Spain.
The gigafactory, at 40GWh, will be one of the largest in Europe and Tata's first outside of India, the conglomerate said in a statement.
The plant, being described as the most important investment in UK automotive since Nissan arrived in the 1980s, may have got subsidies worth hundreds of millions of pounds.
Neither the company nor the UK government gave details of the subsidy provided.
It will supply JLR's future battery electric models including the Range Rover, Defender, Discovery and Jaguar brands, with the potential to also supply other car manufacturers.
Production at the new gigafactory is due to start in 2026.
Tata is reported to have asked for £500 million of state assistance from the UK, including subsidies for the Somerset factory's high-energy use, a one-off grant from the automotive transformation fund, and road improvements to the site.
Details of government support to Tata Sons will be published in due course as part of regular transparency data, a UK government statement said.
Tata Sons in its statement said it will "establish a global battery cell gigafactory in the UK with a capacity to produce 40GW of cells annually."
"This investment of over £4 billion is an integral part of Tata Group's commitment to electric mobility and renewable energy storage solutions and establishes a competitive green tech ecosystem in the UK at scale."
Batteries typically account for more than half of the value of an electric vehicle.
The UK currently has only one plant in operation next to Nissan's Sunderland factory, and another one is on the drawing board in Northumberland.
By contrast, the EU has 35 plants open, under construction or planned.
Natarajan Chandrasekaran, chairman, Tata Sons said, "The Tata Group is deeply committed to a sustainable future across all of our business.
Today, I am delighted to announce the Tata Group will be setting up one of Europe's largest battery cell manufacturing facilities in the UK.
"Our multi-billion pound investment will bring state-of-the-art technology to the country, helping to power the automotive sector's transition to electric mobility, anchored by our own business, Jaguar Land Rover."
"With this strategic investment, the Tata Group further strengthens its commitment to the UK, alongside our many companies operating here across technology, consumer, hospitality, steel, chemicals, and automotive," he said.
Commenting about the announcement, UK Prime Minister Rishi Sunak, said: "Tata Group's decision to build their new gigafactory here in the UK - their first outside of India - is a huge vote of confidence in Britain.
"This will be one of the largest-ever investments in the UK automotive sector.
"It will not only create thousands of skilled jobs for Britons around the country, but it will also strengthen our lead in the global transition to electric vehicles, helping to grow our economy in clean industries of the future."
The battery gigafactory will produce high-quality, high-performance, sustainable battery cells and packs for a variety of applications within the mobility and energy sectors.
"The company's strategic growth plans for its flexible manufacturing capacity will begin with a rapid ramp-up phase and the start of production in 2026.
"The gigafactory intends to maximise its renewable energy mix, with an ambition for 100 per cent clean power.
"The plant will employ innovative technologies and resource-efficient processes like battery recycling to recover and reuse all the original raw materials to deliver a truly circular economy ecosystem," the statement said.
Separately, a statement from the UK government said the investment will create up to 4,000 new direct jobs, and thousands more in the wider supply chain.
New gigafactory would provide almost half of the battery production needed by 2030 - turbocharging the UK's switch to zero-emissions vehicles.
"This investment will be crucial to boosting the UK's battery manufacturing capacity needed to support the electric vehicle industry in the long term.
"With an initial output of 40GWh it will also provide almost half of the battery production that the Faraday Institution estimates the UK will need by 2030," it said.