Ford is planning to invest £24m at its Bridgend engine plant in Wales for manufacturing the new 1.5L EcoBoost gasoline engine.
Additionally, Welsh Government has supported Ford's investment by offering £12m in non repayable funding.
Ford UK managing director Mark Ovenden said: "The Welsh Government has greatly assisted in maximising the full potential of Ford's own investment in Bridgend and we are pleased to meet today with the Welsh First Minister and the Business Minister to recognise this successful partnership."
The Bridgend plant, which will now be the long term European production base for the new 1.5L engine, will commence production in 2014 and ramp up over the next two years to maintain optimum output during the period.
Ford will produce the new engine together with its 1.6L EcoBoost engine, which was launched in 2011.
According to the carmaker, the EcoBoost technology is aimed at delivering the power of a larger engine with smaller unit fuel consumption.
Wales Economy Minister Edwina Hart said the Welsh Government support helped secure this important project for Wales that will help safeguard and create high quality production.
"Ford has invested a total of £1.8billion in its Bridgend plant since it opened in 1980, securing new lines and products that have ensured the plant's on-going success and sustainability," Hart said.
Ford's Bridgend plant is capable of delivering about 2,668 four-cylinder engines per day, with exports to Spain, Sweden, Germany, Russia, Belgium and the US.
