The London Taxi Company's new factory has been opened in the West Midlands, the first car plant to be set up in the UK in more than 10 years.
The Coventry facility will manufacture electric London cabs alongside small electric vans.
The government is setting aside £64m to incentivise cab drivers to switch to the greener taxis, as well as to fund extra charge points.
The London Taxi Company was on the brink of collapse in 2013, but was acquired by Chinese car firm Geely, which also owns Volvo.
Geely has invested £325m in the new plant, which will be able to produce up to 20,000 vehicles per year. 1,000 new jobs will also be created at the site.
The plant, which covers an area the size of 20 football pitches, will also produce small electric vans – seen as a future growth market by Geely.
While Greg Clark, the business secretary, said he was very confident about the future of the UK's car industry, there remain concerns over Brexit.
Chief among these worries relate to tariffs over finished cars and car components between the UK and mainland Europe. If the UK leaves the single market with no comparable trade deal, the UK may revert to World Trade Organisation rules, which would mean a 10% tax on goods moving between Britain and the continent.
Carl-Peter Forster, chair of Geely, spoke at the opening of the Coventry plant. He urged the UK government not to ruin the nation's car industry.
Forster said: “I think there is a mutual interest on both sides not to disrupt … and kill this very positive collaboration between the UK and European car industries. We bank on all governments to keep that in mind.”
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