Britishvolt also had a site in Coventry, but said it had signed a Memorandum of Understanding with the Government of Wales for the structure of the plant in St Athan, Vale of Glamorgan.
He said it could create up to 3,500 jobs and generate 1.2 billion pounds of investment.
Prime Minister Mark Drakeford said the memorandum of understanding is an “important next step.”
He told BBC Radio Wales Breakfast: “That doesn’t mean it’s in the bag.
“There are still things to be done, adding convincing the UK government to supply investments through its automotive transformation fund, however, this is a step along the way and we are very encouraged.”
The deal is not legally binding, but the company told BBC Wales that it now only contemplates the St Athan site for the project.
Britishvolt operations leader Orral Nadjari, who lived in Cardiff for seven years while he was in college, said it was “a very exciting step.”
“The agreement that we have come to with the Welsh Government is that we’re going to exclusively build our batteries for electric vehicles in Wales.”
Nadjari said the company needs to start the structure in the spring of 2021 with the plant fully operational until mid-2023.
Bro Tathan, a former Welsh government-owned former defense minister, is already home to an Aston Martin electric car factory, which produced his first vehicle last week.
The plant would be a significant spice for the automotive industry in Wales.
Earlier this month, Ineos suspended plans to build a new 4×4 plant at Bridgend, which would have created 500 jobs.
The Welsh government said it had invested “a lot of time and money” and would look for the right prices if Ineos retired.
Britishvolt’s chief strategic officer Isobel Sheldon said the company was looking to use local workers and materials.
“I think the battery industry has had a bad press over the years because of the carbon embedded in the production procedures matrix … so we need to locate this source chain and shorten the source lines,” he said.
Dr Matthew Davies, associate professor of engineering at Swansea University, said the selection of the St Athan site “is a very vital progression for Wales and the UK.”
“This industry investment will lead to more jobs and likely will catalyse greater investment into Wales in key areas of renewable and clean energy technologies.
“An additional benefit of making these batteries in Wales is that it reduces our need to import technologies from abroad, saving the associated carbon footprint from shipping, transporting the goods and enhances the sustainability of the batteries.”
Dr Jean-Paul Skeete, from Cardiff Business School, said the plant would have “knock-on effects” such as potentially attracting more electric car makers to the region.
He said the factory would show Wales was “looking ahead and ready to conduct business, which is key in a post-Brexit, post-pandemic economy”.
“Germany and most recently Sweden are by far the most serious contenders regarding lithium-ion battery production in Europe.
A in Wales “would put us directly into this discussion,” he said.