The Swedish Ministry of Defence has abandoned its Splitterskyddad Enhets Platform (SEP) modular armoured tactical system due to lack of funds.
The programme, which began in 1996, has seen BAE Systems Land Systems Hägglunds develop four prototype vehicles using a modular design that allows the vehicles to be configured for more than 20 roles.
Defence Minister Sten Tolgfors says continuation of the project cannot be justified without funding from an international partner.
"Our motivation is largely economic," he says.
"This project would have been very costly in the absence of an international partner to share costs."
Sweden has cut its 2008 defence budget by US$100m in real terms, and has urged the armed forces to stay within their allocated budgets as more money will not be forthcoming.
SEP vehicles had been expected to enter service in 2014.
By Elizabeth Clifford-Marsh