Jaguar Land Rover is to build a range of electric cars in the UK, safeguarding thousands of jobs and delivering a huge boost to the industry after a series of setbacks in recent months.

Investment will be made at the firm’s factory in Castle Bromwich, West Midlands, with other sites and supply companies benefitting from the development.

An all-electric version of the Jaguar XJ sedan replacement will be the first new battery-powered vehicle, followed by others.

The Castle Bromwich plant will close for six weeks so new equipment can be installed.

The investment follows an agreement for employees to work a four-day week as part of restructuring plans.

The plant, near the M6 in Birmingham, employs around 2,500 workers.

Batteries for the new electric XJ will be made in Hams Hall, Warwickshire, while the electric motors will be manufactured at JLR’s engine plant near Wolverhampton.

Dr Ralph Speth, chief executive of JLR, said: “The future of mobility is electric and as a visionary British company, we are committed to making our next generation of zero-emission vehicles in the UK.”

The Government and union leaders welcomed the news as a “fantastic boost” to the car industry.

JLR said its announcement was the next significant step in delivering on the company’s commitment to offer customers electrified options for all new Jaguar and Land Rover models from 2020.

The XJ has been in production for 50 years and has been popular with business leaders, celebrities, politicians and royalty and has been exported to more than 120 countries.

The news was confirmed to workers at Castle Bromwich as production of the current XJ came to an end on Friday.

Dr Speth said: “We are co-locating our electric vehicle manufacture, electronic drive units and battery assembly to create a powerhouse of electrification in the Midlands.”

JLR said the new battery assembly centre at Hams Hall, operational in 2020, will be the most innovative and technologically advanced in the UK with a capacity of 150,000 units.

Castle Bromwich will become the UK’s first premium electrified vehicle plant, said the company, adding that work will start later this month to install new facilities and technologies.

Business Secretary Greg Clark said: “Today’s announcement is a vote of confidence in the UK automotive industry – protecting thousands of skilled jobs. It reflects our determination for the UK to be at the forefront of the development and manufacturing of the next generation of electric vehicles.

“The Government has made a big strategic choice in its industrial strategy to be a leading force in the move to electric vehicles, investing and building on our research strengths in the Faraday Challenge and the Battery Industrialisation Centre. We are now perfectly placed to host a gigafactory and we are determined to realise that ambition.

“JLR’s announcement recognises the strength of the excellent workforce at Castle Bromwich and acknowledges the efforts of many parties, including the Government and the mayor, Andy Street, to invest and build a sustainable future in the region for advanced manufacturing, safeguarding jobs and skills.”

Unite union assistant general secretary Steve Turner said: “Today’s trailblazing announcement is testament to the skill and hard work of Unite members and shop stewards.

“Not only is it a fantastic boost to the UK car industry, but it ensures that Jaguar Land Rover’s Castle Bromwich site remains a powerhouse of the regional economy, providing a living for thousands of workers and supporting many more in the supply chain.

“This is a proud day for our members and Jaguar Land Rover. The Government and Theresa May’s replacement as prime minister must make sure it is not the last for the UK’s world-beating car workers and their families."

Alan Jones is PA Industrial Correspondent.