Indian tech company Ola has announced plans to invest £100m in the UK to open a research and development facility for a planned electric car, in a significant boost to the British automotive industry.

Ola launched its taxi app that rivals Uber in cities including London, Birmingham and Cardiff in 2018, but it is pushing into electric vehicles with a recently launched road-going scooter and a planned electric car.

The new facility will be based in Coventry, the traditional West Midlands centre of the UK automotive industry. It will create 200 jobs in design and engineering. Workers at the plant will also research battery technology.

Ola was founded in India in 2010 by Bhavish Aggarwal, and it now claims to be the world’s third-largest ride-hailing app. This week its electric vehicle arm, Ola Electric, raised $200m in funding at a reported $5bn (£3.7bn) valuation – previous backers include Softbank, the major Japanese technology investor. It is also reportedly planning a stock market float to raise as much as $2bn.

The scooters are currently designed and manufactured in Bengaluru, but Ola said the new UK facility, dubbed its “Futurefoundry”, will work closely with the headquarters. The company did not detail where it would build its electric cars, although wage costs are significantly lower in India than in the UK.

The investment will likely be seen as a vote of confidence in the UK automotive industry, which has seen a recent jump in investment following years of underperformance as big firms awaited clarity on the crucial trading arrangement with the EU.

Traditional carmakers such as Volkswagen are racing against newer companies led by America’s Tesla to invest in facilities to build new battery electric vehicles (EVs). However, EVs still only accounted for about 12% of UK sales in 2021.

The alliance between Renault, Nissan and Mitsubishi became the latest traditional carmaker to outline plans on Thursday for major investments. The alliance said it would spend €23bn (£19.2bn) over the next five years to launch new electric models, including a new Nissan compact car in Europe – built at a Renault factory in northern France – to replace the Micra.

Ola would be a relatively late entrant to the electric car market, but its scooters have initially targeted its home market which is dominated by cheaper models.

Ola’s Aggarwal said: “Ola Futurefoundry will enable us to tap into the fantastic automotive design and engineering talent in the UK to create the next generation of electric vehicles. Futurefoundry will work in close collaboration with our headquarters in Bangalore, India, to help us build the future of mobility as we make electric vehicles affordable across the world.”

The company last year recruited Wayne Burgess, a former Jaguar and Geely designer, to lead the UK vehicle design efforts. Burgess said Ola wanted to create a “world-class design and R&D team with global sensibilities”.

He added that the company will look at “two-wheeler, four-wheeler and other form factors.”