When Britishvolt started gaining momentum with its plan to build a giant battery factory in north-east England, its timing could barely have been better. The then prime minister, Boris Johnson, was on the lookout for big projects that could bring jobs to poorer areas of the country and burnish his green credentials.

Britishvolt, with its ambition of making hundreds of thousands of batteries a year to power the switch to electric cars from the internal combustion engine, fitted the bill. But less than a year after Johnson praised the “absolutely amazing investment” in parliament, after promising £100m in government support, Britishvolt’s dreams are in jeopardy, with the company considering entering administration.

The startup was, on Monday evening, still in talks with potential white-knight investors. However, a source with knowledge of the situation said questions over the status of the government funding – which was dependent on Britishvolt securing expensive equipment – had been an issue for some potential suitors.

An insolvency process would probably result in about 275 people being made redundant. A skeleton staff of about 25 would stay around to turn out the lights at a three-year project that had promised to create as many as 3,000 jobs.

Britishvolt was incorporated on New Year’s Eve in 2019 by the Swedish businessmen Orral Nadjari and Lars Carlstrom. They set about drumming up investment and media coverage despite starting with no track record with the technology, no source of the £3.8bn in funding they estimated was required and – crucially – no guaranteed customers.

Nevertheless, Britishvolt did manage to attract serious backers and genuine interest from major car companies. It signed memorandums of understanding with the British sports car brands Aston Martin Lagonda and Lotus and got to the point of delivering prototypes of the battery cells it hoped to make – albeit made in the government-funded UK Battery Industrialisation Centre rather than in its own facility.

On the investment side too, Britishvolt attracted serious backers from among the FTSE 100’s blue-chip companies: Glencore and Ashtead both made equity investments worth tens of millions of pounds apiece, while Tritax, a property investment company owned by abrdn, said it would eventually provide £1.7bn to construct the factory building near Blyth in Northumberland.

Yet the company faced mounting difficulties as it spent heavily to develop its technology, to attract senior people and to start construction of its factory. Over the summer, the funding pressures became so acute that it was forced to put the project on “life support” to conserve cash.

Both of its co-founders had departed by August this year. Ex-Ford executive Graham Hoare led an effort to professionalise the operation, amid questions over extravagant practices within the startup, revealed by the Guardian. They included leasing a seven-bedroom £2.8m mansion with an indoor swimming pool and Jacuzzi for executives, hiring a Dubai-based fitness instructor to conduct yoga classes for staff over video, and travelling in a private jet owned by one of its billionaire shareholders.

The proposed site is still a muddy field, albeit with some important earthworks having been carried out. However, there is still thought to be significant interest in the property, whether or not Britishvolt survives.