The first new car plant in Britain for more than a decade will open in Coventry on Wednesday, creating more than 1,000 jobs and boosting the automotive industry despite concerns that uncertainty caused by Brexit could hold back new investment, reports The Guardian.

The London Taxi Company (LTC), maker of the iconic London black cab, is officially opening a plant that will make electric taxis. The factory is being funded with £300m of investment from LTC’s owner, Chinese company Zhejiang Geely Holding Group, as well as a £16.1m grant from the government through the regional growth fund.

Greg Clark, the business secretary, said the new facility, which will also house research and development, demonstrates that the UK is a “world leader in the development of new automotive technologies”.

Clark has pledged to put support for the development of electric vehicles at the heart of the government’s industrial strategy.

However, the growth of the fledging industry risks being curtailed by the uncertainty caused by Brexit, which analysts say led to a drop in investment in the car sector last year.

The business secretary said: “Our iconic black cabs are famous across the world. The London Taxi Company’s impressive new factory and R&D facility showcases the innovation that makes the UK a world leader in the development of new automotive technologies.

“Through our ambitious industrial strategy, we are committed to building on our strengths and taking advantage of the opportunities the new low-carbon economy provides.”

A new report warned earlier this week that the cost of assembling a car in Britain could increase by £2,370 in the event of a “hard Brexit”, forcing some manufacturers to look at moving production out of the country.

The increase in costs – equivalent to more than 10% per vehicle – would hit the average UK-built car if Britain falls back on World Trade Organisation rules after leaving the EU. Even if the UK agrees a tariff of 5% with the EU on importing and exporting cars and 2.5% on components then £1,202 will be added to the cost of production.

The research warned that it would make economic sense for some manufacturers to abandon British factories if 10% WTO tariffs are introduced. The cost of exporting 200,000 cars a year from the UK would be £920m after two years, which PA Consulting said would “easily” cover the cost of building a new plant in the EU.

Toyota last week announced it was investing £240m into upgrading its car plant in Derbyshire while Nissan has committed to expanding its Sunderland factory, the biggest in the UK. However, the European boss of Toyota warned tariff-free access to Europe was vital to the future success of the Burnaston plant and concerns are growing about other factories. There are fears that General Motors’ Vauxhall plants at Ellesmere Port, Merseyside, and Luton, Bedfordshire, could be downsized or even closed after the business was bought by Peugeot. BMW has also warned it could make the new electric Mini in Germany rather than its factory in Oxford. The new electric taxi plant is also being supported by £64m of funding from the Department for Transport towards encouraging the use of electric taxis. This funding will be used to offer taxi drivers a £7,500 discount on the cost of an electric vehicle and pay for more charging points across the UK. John Hayes, the transport minister, said: “This government is committed to improving air quality and reducing pollution in towns and cities, which is essential for people’s health and the environment. “This is also great news for the economy as we invest in cutting edge technology and the next generation of transport and engineering professionals by creating thousands of new high skilled jobs.” Unions welcomed the investment, particularly in the light of the London Taxi Company going into administration in 2013 before being bought by Geely. Unite regional officer Peter Coulson said: “This a fantastic story of a company that was on its knees in 2013; now thanks to the commitment of Geely’s top management and accompanying large-scale investment the iconic London taxi is set for its continued renaissance. “Tribute should also be paid to the dedicated workforce who have worked hard and diligently to contribute to the current success.”