"Sunderland could now be a strong contender to produce electric vehicles for Nissan in Europe, and we will continue to work with Nissan to ensure this happens," he said.

Global downturn

Carmakers around the world are exploring plans for mass electric-car production as the industry seeks to haul itself out of a devastating downturn sparked by the global recession.

Nissan intends to build a similar plant to the British one in Portugal as part of a scheme to manufacture and sell the environmentally-friendly cars.

Each plant would produce 60,000 batteries a year.

"The two governments have offered to extend financial assistance and other support to ensure that Nissan locates the proposed plants within their respective countries," the company said.

A spokeswoman for Nissan said details of grants and loans from the governments had yet to be finalised.

Nissan's announcement comes less than a week after Toyota, another Japanese carmaker, said it would produce its first European-built hybrid car in Britain from 2010.

A hybrid car is part-powered by electricity and is more fuel efficient than traditional vehicles.