Polestar will no longer sell cars in the U.S. after the Commerce Department didn't grant the Swedish electric vehicle maker authorization under the Connected Vehicle Rule, the company said Thursday.
The Commerce Department denied Polestar authorization under the Connected Vehicle Rule, forcing the Geely-owned brand to wind down U.S. sales
Bloomberg / Getty Images
Polestar will no longer sell cars in the U.S. after the Commerce Department didn't grant the Swedish electric vehicle maker authorization under the Connected Vehicle Rule, the company said Thursday.
The rule restricts vehicles with Chinese software or hardware from being sold in the U.S. Polestar, which is owned by Chinese automaker Geely, had requested a special authorization to continue selling its vehicles in the American market. Without that authorization, the company cannot market or sell new model-year 2027 vehicles, according to Yahoo Finance.
Polestar stock was down more than 13% in midday trading on Thursday.
Under the Connected Vehicle Rule, two categories of foreign technology face restrictions on data security grounds: software with Chinese or Russian origins is prohibited starting with the 2027 model year, while a ban on importing and selling Chinese or Russian vehicle-connected hardware takes effect in 2030.
On its way out of the American market, Polestar plans to sell through remaining inventory of the Polestar 3 and Polestar 4 before winding down U.S. sales and marketing operations and redirecting its commercial efforts toward Europe. People who already own or lease a Polestar will keep their current level of service access, and all warranties will be honored, according to TechCrunch.
Polestar noted that 94% of its retail sales volume in the first quarter of 2026 came from markets outside the U.S., and that it is now increasing its focus on Europe.
Notably absent from the ban is Volvo, another Geely-owned brand that shares a manufacturing plant with Polestar and was granted authorization to keep selling in the U.S. just months before the government shut Polestar out. Volvo described its approval as the outcome of direct engagement with federal officials: "The process is carried out on a case-by-case basis and the issuance of a specific authorization follows constructive discussions with the US Department of Commerce and other US officials regarding Volvo Cars' governance, technology and data security," the company said in May.
Polestar has been navigating a difficult financial period. The company posted a first-quarter net loss of $383 million, more than double the $166 million it lost in the same period a year earlier, as U.S. and E.U. tariffs combined with pricing pressure weighed on margins. The company's gross margin fell to negative 3.2% from positive 10.3% in the first quarter of 2025.
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