Britain’s biggest carmaker said it had forced itself into the decision despite continued Brexit uncertainty but signalled future investment in its home market was not guaranteed as it needed to see the “right deal”.
The company said the first electric vehicle to be produced at the Birmingham factory would be Jaguar’s flagship saloon, the XJ.
It will be seen as a boost for the British car industry after JLR chose to make its first electric car, the Jaguar I-Pace, in Austria.
Earlier this year the company – which employs more than 40,000 people in the UK with sites at Halewood, Solihull, Castle Bromwich and Wolverhampton – said it planned to cut 4,500 jobs globally as it works to turn around its fortunes.
There have been reports of the Castle Bromwich plant, which employs 2,500 people, laying off staff and moving to a four-day week.
In May, JLR reported a record annual loss of £3.6bn as it counted the cost of “multiple” challenges including plunging sales in China, the shift away from diesel, and Brexit.
The company, owned by India’s Tata Motors, has previously warned that a no-deal departure from the EU could cost it up to £1.2bn a year.
Like other car makers, it relies on just-in time delivery of imported parts to ensure the efficient operation of its production lines.
In an interview with Sky News, JLR chief executive Dr Ralf Speth denied any suggestion the investment it had announced amounted to the company crying wolf over Brexit.
“I am not a wolf but I know my facts and figures,” he responded.
JLR said: “We are making this investment because the ongoing Brexit uncertainty has left us with no choice, we had to act, for our employees and our business.
“We are committed to the UK as our home and will fight to stay here but we need the right deal.
“We will continue to work with government to secure a deal that support business.”
Last week, Vauxhall’s French owner PSA said it planned to build the next generation of its Astra model at Ellesmere Port but that this was “conditional on the final terms of the UK’s exit from the European Union”.
Honda and Ford declared earlier this year that their plans to shut factories – at Swindon and in Bridgend – had nothing to do with Brexit.
The sector is under pressure, at a time of falling global sales, to invest heavily in electric technology.
Industry body SMMT said it was a matter of “grave concern” that sales of alternatively-fuelled vehicles are falling in the UK and demanded more incentives for drivers to switch from older petrol and diesels.
JLR’s latest announcement forms part of its plan to offer a full range of Jaguar and Land Rover models from 2020.
It has already said it will open a battery making site from 2020 in the Midlands.
JLR said the transformation of Castle Bromwich into an electrical vehicle plant would begin next month with the installation of new facilities.
In his interview, Dr Speth admitted it would take time to get up to speed saying production would ramp up slowly once it got underway.
“We are co-locating our electric vehicle manufacture, Electronic Drive Units and battery assembly to create a powerhouse of electrification in the Midlands,” he said.
The Unite union said vehicle production workers at Castle Bromwich helped secure the investment by agreeing to a condensed week “offering them greater work-life balance, while giving the car maker greater flexibility”.
Its assistant general secretary for manufacturing, Steve Turner, said: “Today’s trailblazing announcement by Jaguar Land Rover is testament to the skill and hard work of Unite members and shop stewards.
“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 UK’s world beating car workers and their families.
“The Tory leadership contenders need to stop trying to out-bid one another over a disastrous no-deal Brexit and take it off the table to help secure further investment in the UK car industry and the future of other car plants, such as Vauxhall’s Ellesmere Port site.”
The business secretary Greg Clark said the announcement was “a vote of confidence in the UK automotive industry”.
But his labour shadow, Rebecca Long Bailey, noted: “The fact remains that overall investment in UK automotive is plummeting and global players are choosing to invest in electrification elsewhere.
“The government must urgently work with industry and trade unions to ensure this investment from JLR is a model to other manufacturers and not an exception.”
Author: John-Paul Ford Rojas & James Sillars
Electric Jaguar cars will be a bliss!