It said the St Athan site will be the “home of electrification” and produce the zero-emission Lagonda brand.
Production of the Rapid E car, its first all-electric model, is expected to commence in 2019, with the latest investment creating an additional 200 jobs at the site – in total, the plant will support up to 750 jobs in South Wales.
The announcement comes as Prime Minister Theresa May outlined the government’s ambition to put the UK at the forefront of the design and manufacturing of zero-emission vehicles.
International Trade Secretary Dr Liam Fox MP said: “I’m delighted that Aston Martin has chosen St Athan as its centre for electrification and the home of Lagonda production in a move that will create hundreds of high skilled jobs in the coming years.
“The UK has world leading expertise in manufacturing and developing low carbon vehicles and this investment is yet another vote of confidence in the our highly competitive automotive industry.”