The company INEOS will be creating up to 500 jobs on a site next to the Ford plant in Bridgend.
INEOS Automotive plans to create its new 4x4 Grenadier vehicle in the town.
It said it will create 200 jobs initially and up to 500 in the long term.
INEOS is buying 14 acres of land from the Welsh Government to house its new facility.
Production of the 4x4 is due to start in 2021.
The manufacturer is also in talks with two Wales-based supply companies, which could mean a further boost to the Welsh economy.
ITV Wales spoke to Ford workers on their way into work and asked them what they thought of the news.
This is a huge vote of confidence in the workforce and economy of Wales at an incredibly challenging time.
Senior organiser from GMB Union, Mike Payne, also wants to make INEOS coming to Bridgend a success after the closure of the Ford factory.
After months of deeply worrying developments in South Wales’ automotive sector and beyond, this is truly wonderful news for Bridgend County Borough and will help guarantee our region’s place as a leader in this vital industry.