BMW has said it will produce the engine for its i8 petrol-electric supercar in the UK.
The car's three-cylinder petrol engine will be made at the carmaker's Hams Hall factory near Birmingham.
The engine is designed to extend the plug-in hybrid's range beyond that supplied by its batteries.
Business secretary Vince Cable described the announcement as "more good news for the UK automotive sector".
"It is yet another indication that international companies see the UK as one of the best places to develop and manufacture low emission vehicle technologies," he said, insisting that it "underlines our competitive strength".
BMW's plug-in sportscar will go on sale in 2013, offering "sportscar performance with small car fuel consumption", BMW Group's sales and marketing director Ian Robertson said in a briefing at the annual motor industry gathering organised by the Society of Motor Manufacturers and Traders (SMMT).
The car is designed to accelerate from nought to 62mph (100km/h) in five seconds while also having the potential to deliver 78mpg (3 litres/100km). When using just the battery, the car's range is about 20 miles.
The plan to make the car's petrol engine in the Midlands is part of a £500m ($777m) investment in the UK that BMW announced a year ago.
On Wednesday, the carmaker will open a showroom in London dedicated to sell cars from its i-division which focuses on electric and hybrid cars.
BMW's investment, in turn, is part of a total £5.6bn of investment in UK car production announced by global automotive groups over the last couple of years, said SMMT chief executive Paul Everitt.
"We're going through quite a remarkable period in the UK at the moment," he said.
The success of the UK's motor industry is a welcome turnaround from 2009, when the government introduced a scrappage scheme to help the sector through a crisis.
"Over the last year or so there's been significant investment in the UK, probably more than in the last decade," said BMW's Mr Robertson, referring to how a string of carmakers such as Nissan, Toyota, Jaguar Land Rover, Vauxhall and Mini, have seen their manufacturing output in Britain soar during the last couple of years.
By the end of 2015, UK production may have risen to more than two million cars from 1.3 million last year, thus beating the previous record of 1.92 million cars made in 1972, the SMMT predicts.
But current growth is no guarantee of future success, Mr Robertson cautioned.
"We must never be complacent," he said.
"This is one of the most competitive industries in the world."