Geely will not bid for a majority stake in Fisker Automotive, mainly because of the electric car maker’s obligations to the US government, reported Reuters, citing two sources.

When the US Department of Energy (DOE) granted Fisker a US$529m loan, it set certain conditions on the company, which are discouraging Geely from investing in it. The sources said the conditions include an obligation to reinstate capacity and jobs at the company’s Delaware plant according to a schedule decided by the US government.

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One source said, “Those obligations are too complicated to handle and seem too risky. 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.”

According to the sources, Geely’s decision is not related to the recent resignation of Henrik Fisker, founder and executive chairman of Fisker Automotive. Fisker said he was leaving the company over disagreements with the top executives over business strategy.

Fisker has not produced a car since July, and is looking for financial support to help build its second model, the Atlantic plug-in hybrid. The company was hoping to finalise a deal with a strategic investor by the middle of March. Geely was said to be a favourite for the deal.

Geely was eyeing Fisker’s Delaware factory because it wanted to boost demand for its Volvo cars in the US, and was interested in making Volvo cars there.

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Another contender, Dongfeng Motor, has submitted its final offer for the Fisker stake.

The DOE needs to approve any merger deal undertaken by Fisker, according to their loan agreement.