Ford is to invest £230m in its Halewood plant on Merseyside to make electric car parts, helping safeguard 500 jobs.
The investment will mean the plant will run for many years longer, said Stuart Rowley, president, Ford of Europe.
There had been speculation about the future of the Halewood factory complex as Ford moves towards electrifying its vehicles.
Part of the investment will come from the government’s Automotive Transformation Fund.
“We’re really pleased with the support from the UK government,” Mr Rowley told the BBC.
“We’re not disclosing the exact amount, but it was good support for what is a very significant investment in the UK.”
He said the government support was “a part of the decision” to choose to invest in Halewood, “but not the only element”.
Ford is not the first manufacturer to receive financial help for electric vehicle production through the fund, set up to encourage investment in electric vehicle manufacturing in the UK.
In July, Nissan said it would expand electric vehicle production at its car plant in Sunderland, with support from the government. And Nissan’s partner, Envision AESC, will build an electric battery plant.
Ford’s Halewood plant will begin manufacturing electric power units – which replace the engine and transmission in petrol cars – in 2024.
Mr Rowley said the plans were “a huge vote of confidence in [the] workforce”.
“Ford has been part of the industrial and social fabric of the UK for many decades,” he said, adding that the plant would be a “very important” part of Ford’s electrification plans in Europe.
Business Secretary Kwasi Kwarteng said the Ford decision was “further proof that the UK remains one of the best locations in the world for high-quality automotive manufacturing”.
“In this highly competitive, global race to secure electric vehicle manufacturing, our priority is to ensure the UK reaps the benefits,” he added.
Kevin Pearson of the Unite union said the Ford investment “recognises the experience, commitment and competitiveness of our world class workforce and is a great source of pride for all of us working at Halewood Transmission Plant and for the wider community”.
The announcement suggested the facility would be an important part of electric vehicle manufacturing in the UK, Prof David Bailey of Birmingham Business School, said.
He said that was “especially great news” because there had been “a lot of speculation about the plant”, including that Ford might move parts manufacturing and car assembly abroad.
Had Halewood closed, it would have had a knock-on effect on other parts of the UK car industry and the local economy, he said.
Prof Bailey said that the UK’s exit from the EU had been a “huge concern” initially, before the tariff-free trade deal was agreed between the EU and the UK.
However, Ford said that it was not currently facing the kind of supply chain difficulties affecting some other UK businesses. Additional post-Brexit paperwork at ports, which has contributed to bottlenecks for some UK-based firms, has not been much of an obstacle for Ford as it has its own landing facilities at Dagenham, the firm said.
Ford is concerned about any possible fallout from UK and EU negotiations over the Northern Ireland Protocol, a spokesperson said.
The global car giant also recently announced a $1bn (£730m) investment in its vehicle assembly facility in Cologne, Germany, and an expansion of electric vehicle production in Turkey and Romania.