GM said Tuesday that Koenigsegg Group AB has decided to end the deal, which was announced in June. Financial details of the Saab acquisition were not disclosed by GM.
GM had been trying to unload the Swedish Saab brand as it restructured under bankruptcy protection earlier this year.
GM Chief Executive Fritz Henderson says the Detroit automaker is disappointed in the decision and will take the next several days to figure out what to do.
A person briefed on the deal said Tuesday that Koenigsegg informed GM of the decision on Monday, and Saab's future is now unclear. GM's board will have to decide the company's next move, said the person, who asked not to be identified because the decision has not been made.
The deal, in the works for months, apparently fell through because Koenigsegg had trouble arranging financing. The company in August said it lacked about 3 billion kronor ($417 million) to conclude the deal.
Koenigsegg Group said in a statement Tuesday that it came to the "painful and difficult conclusion" that it wouldn't be able to complete the deal.
"The time factor has always been critical for our strategy to breathe new air into the company," it said. "Unfortunately delays in the completion of the deal have resulted in risks and uncertainties that stop us from carrying out the business plan."
In September, a consortium led by Koenigsegg struck a preliminary agreement with Beijing Automotive Industry Holdings to give the Chinese company a minority stake in Koenigsegg Group.
The consortium includes Norwegian investor Baard Eker and Augie K. Fabela II, co-founder and former chairman of Russian telecom operator VimpelCom.
The deal was subject to a funding commitment for Saab from the European Investment Bank, to be guaranteed by the Swedish government.