Billionaire Sir Jim Ratcliffe, a Leave campaigner in the run-up to the 2016 Brexit referendum, has confirmed a new 4x4 vehicle will be built in France.
It ends hopes his Grenadier off-roader, based on the original Land Rover, would be made at a new plant in Wales.
Those plans were put on hold in July while Mr Ratcliffe's Ineos Automotive negotiated buying Mercedes-Benz's Hambach site, in Moselle.
He said on Tuesday that Hambach offered a "unique opportunity".
Mr Ratcliffe, who built his fortune heading the chemicals company Ineos, added that Hambach was "a modern automotive manufacturing facility with a world-class workforce".
"Ineos Automotive set out a vision to build the world's best utilitarian 4x4, and at our new home in Hambach, we will do just that," he said.
When plans to build the vehicle at Bridgend, south Wales, were first announced, Mr Ratcliffe said it was "a significant expression of confidence in British manufacturing".
It was hoped the factory would create up to 500 jobs, producing about 25,000 Grenadiers a year, once fully up and running.
Chris Elmore, Labour MP for the Ogmore constituency in Bridgend, tweeted that Tuesday's decision was a "crushing blow" for the area.
"The highly-skilled and dedicated workforce in Ogmore, Bridgend and surrounding areas would have risen to the challenge," he wrote.
"That Brexit is clearly a major factor at play is a bitter pill to swallow. Ineos owner Sir Jim Ratcliffe was a vocal Brexiteer, loudly proclaiming the benefits of leaving the EU. Today, we can see his claims are as hollow as his promises."
Under the deal, Ineos will also build Daimler's Smart EQ electric car at the Hambach site and supply parts for Mercedes Benz, as well as producing the Grenadier, inspired by the Land Rover Defender.
In a statement, Ineos Automotive said: "The site's location on the French-German border, only 200km from Stuttgart, gives excellent access to supply chains, automotive talent and target markets."
Daimler, the German company that owns Mercedes, said Ineos would take control of the factory in the coming weeks. No sale price was disclosed. The new vehicle will start being built at Hambach late next year.
"This acquisition marks our biggest milestone yet in the development of the Grenadier," Dirk Heilmann, chief executive of Ineos Automotive, said.
The decision is the second major blow for Bridgend, as the factory would have stood beside the now-closed Ford engine plant. Ford shut the plant in September after 40 years, with the loss of nearly 1,700 jobs.