Rishi Sunak has sealed a deal to bring a battery gigafactory to Somerset to supply Jaguar Land Rover’s new electric models.

The carmaker’s parent company, India’s Tata Motors, is finalising an announcement to build its flagship battery plant in Britain after the UK trumped Spain to secure the investment.

Three sources said the investment could be announced as soon as Wednesday, representing a significant win for the government to boost green technologies.

The UK is facing stiff competition from the European Union and the White House, both of which have revealed incentive packages worth tens of billions of pounds to attract electric car companies and their suppliers.

The Treasury was rumoured to have offered up to half a billion pounds in subsidies to Tata to secure the plant, although Jaguar Land Rover previously denied it had been offered funding to influence the decision. Tata is also seeking up to £300m for its steelworks in Port Talbot.

Such a sum would represent a substantial bet on a single site by officials. Darren Jones, chair of the Business and Trade Committee, said MPs would want to “reflect” on whether the subsidy required to secure battery investment was “scalable to meet the need for future battery manufacturing sites”.

The win would come despite Spain having €2bn of EU funds earmarked to boost its domestic electric vehicle sector. However, it had set a limit of €350m for financing new battery plants.