China’s Zhejiang Geely Holding Group will not bid for a majority stake in Fisker Automotive, mainly due to the automaker’s obligations to the US government, Reuters reported, citing two confidential sources.

Geely, the owner of Volvo, was expected to win the deal for the maker of the Karma, but the Chinese firm doesn’t care for the conditions attached to Fisker’s $529 million loan from the US Department of Energy (DOE), which include restoring capacity and jobs at the firm’s Delaware plant. Any merger deal that Fisker makes must be approved by the DOE.

“Those obligations are too complicated to handle and seem too risky,” one of Reuters’ sources said. “The plan’s footprint was too big. It would take a long, long time to fill up the plant with products and restore employment there.” The decision was not related to last week’s resignation of founder Henrik Fisker.

The state-owned Dongfeng Motor Group is also bidding for a slice of Fisker, and the sources said that it had submitted its final offer last week. Also said to be in the mix is the Wanxiang Group, a Chinese auto parts maker that purchased bankrupt battery maker A123 Systems, Fisker’s main supplier.

Source: Reuters via GreenCarReports