A site at Coventry Airport has been earmarked for the sprawling plant, which will manufacture batteries for electric vehicles.
Regional leaders are now on the hunt for private sector investment for the project, which needs to be secured before submitting a bid for up to £500 million of government funding.
Birmingham MP Liam Byrne, Labour's candidate for West Midlands Mayor, said the region could lose thousands of jobs unless the scheme was backed by the Government.
He called on Ministers to provide cash incentives for the scheme in next month's Budget, saying a gigafactory would help "secure our green industrial future".
"Already our European competitors are being backed by their governments," Mr Byrne said.
"Both France and Germany have provided financial incentives estimated to be €750 million and €1 billion respectively to battery manufacturing firms. Our government needs to back green vehicle manufacturing in this region on a similar scale.
"This is vital for our future as a green car manufacturing region."
Andy Street, the Conservative West Midlands Mayor, said securing the airport site was a "huge step forward".
He said: "The next step is to submit the case to Government to win the funding required, and discussions are already well underway with the UK’s leading car makers and battery suppliers across the globe to put together the strongest bid possible.
"I will not rest until the West Midlands has the Gigafactory it needs."
Councillor Steve Caudwell, the Green Party candidate for Mayor, said the project was a long way from becoming a reality.
"All they've really done is agree which field they want to dig up," he said.
The proposals are being developed by Coventry Council in a joint venture partnership with Coventry Airport Ltd.
A planning application is due to be submitted in the coming months.
The Government recommended a gigafactory for the West Midlands in the Comprehensive Spending Review, and has pledged £500m for the development and mass production of electric vehicle batteries.
It is thought that up to eight plants could be needed across the country, with the sale of new petrol and diesel cars set to be phased out by 2030.
Jaguar Land Rover has announced that its Jaguar brand will be all-electric by 2025 as part of plans to phase out the production of diesel engines.