A123 Systems, a lithium-ion battery maker that received a $249 million grant from the U.S. government, filed for bankruptcy protection on Tuesday.
The advanced car battery industry has been hurt by overcapacity amid weak U.S. demand for electric cars.
A123 had promised to create 38,000 U.S. jobs, including 5,900 at its own plants, in return for the government funding under the 2009 American Recovery and Reinvestment Act's Electric Drive Vehicle Battery and Component Manufacturing Initiative.
The company received a $465 million lifeline from Chinese auto-parts maker Wanxiang Group Corp earlier this year.
A123 had said on Monday that it could default on some debt agreements and that it was considering strategic alternatives.
A123 listed total assets of $459.8 million and liabilities of $376 million in its Chapter 11 petition.