High end electric car maker Fisker Automotive, which has had financial difficulties for months, said it was laying off 75 percent of its workforce.
The US government had focused on the California-based company to encourage the development of green energy, providing it with loans.
"Over the last several months, Fisker Automotive Inc. has been considering strategic alternatives that would allow the company work through its current financial challenges," said a company statement cited by the auto trade press.
"Our efforts to secure a strategic alliance or partnership are continuing in earnest, but unfortunately we have reached a point where a significant reduction in our workforce has become necessary."
The statement goes on to say that, by the end of the day Friday, Fisker "will have retained approximately 25 percent of our workforce."
Fisker was started in southern California in 2007 by former Aston Martin and BMW designer Henrik Fisker and German business partner Bernhard Koehler. Fisker left the company in early March.
While Fisker did not have the expected success with its Karma model, which has a price tag of roughly $100,000, it did attract the likes of stars such as Leonardo DiCaprio, Justin Bieber and Ashton Kutcher.
The car maker lost some 300 vehicles in flooding caused by Hurricane Sandy along the US East Coast last fall and had trouble with several of its suppliers.
Several media outlets had recently reported about discussions to place the company under bankruptcy protection. Fisker had refused comment.