Ford is investing 70 million in its Bridgend engine plant to produce new low CO2-emitting 1.6-litre petrol engines.
The low emission engines will go into production within two years and go on sale globally carrying the name EcoBoost.
They will feature turbocharging and direct-injection technology, and are expected to provide up to 20% better fuel economy, 15% lower CO2 emissions and good driving performance.
More than 2000 people are employed at the Bridgend plant, which has received 315 million in investment over the past five years. The extra funding will also help increase production capacity to a million engines a year.
The investment includes 13.4 million of Welsh Assembly Government money.