Jaguar Land Rover's Jaguar brand will be all-electric by 2025, the carmaker has said.
The company will launch electric models of its entire Jaguar and Land Rover line-up by 2030, it added.
The firm said it would keep all three of its three British plants open as part of its new strategy.
But it has dropped plans to build an electric version of its XJ saloon at the Castle Bromwich plant, meaning the site will eventually stop making cars.
Chief executive Thierry Bolloré said the plant would focus instead on "non-production" activities in the long term, without giving details.
The company plans to spend about £2.5bn a year on new technology for its cars.
This is a big move for Jaguar Land Rover, but the reality is it has little choice.
Like other manufacturers, it is under pressure to reduce the CO2 emissions from its fleet, as new regulations come into force in Europe and elsewhere. At the same time, sales of diesels - which generally produce less CO2 than petrol engines - have been plummeting.
And in the longer term, the UK government wants to outlaw the sale of all wholly petrol and diesel cars from 2030. Governments in other countries are moving in the same general direction.
The problem is, electric cars cost more to design and build than conventional models, meaning it is currently hard to make a profit from them. Bigger manufacturers can throw money at the problem now, and hope to benefit from economies of scale later.
JLR is a smaller company and can't do that - so instead it will re-emphasise Jaguar's credentials as a luxury brand when it goes all-electric.
That might make sense from a marketing point of view, but making the sums add up looks like a steep challenge.
It will also invest in hydrogen fuel cell technology. Fuel cells provide electric power, without producing tailpipe emissions - water is the only by-product.
However, in order for them to be truly environmentally friendly, the hydrogen itself needs to be produced using renewable sources.
Transport Secretary Grant Shapps said the announcement was "a huge step for British car manufacturing".
Carmakers are under pressure to meet stringent carbon emission demands in Europe and China, as well as customer demand for high-performance electric cars with a luxury or performance feel.
The UK plans to ban the sale of new petrol and diesel cars from 2030.
Luxury car brand Bentley Motors, owned by Germany's Volkswagen, said in November its range will be fully electric by 2030, and last month General Motors said it aimed to have a zero tailpipe emission line-up by 2035.