Polestar Banned from Selling New Cars in U.S. Starting 2027 Due to Connected Vehicle Rules

The U.S. "Connected Vehicle Rule," effective January 2025, prohibits connected vehicles with substantial ties to China or Russia from entering the U.S. market, covering features such as telematics, cameras, and microphones. On June 29, 2024, citing this rule, the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce denied Polestar’s authorization application, deciding to ban the sale of new Polestar vehicles in the United States starting with the 2027 model year. The ban stems from Polestar’s ownership structure: it is controlled by Geely Holding Group, which also controls Volvo Cars, thereby constituting the “affiliation” referenced in the rule. Although the Polestar 3 is manufactured in South Carolina and the Polestar 4 is assembled in Busan, South Korea—neither being made in China—both models were denied exemption. In contrast, Volvo Cars, also owned by Geely Holding, has already received authorization from the U.S. Department of Commerce to continue selling connected vehicles in the United States. Analysts note that Volvo, as an independent publicly listed company with a longer operational history and deeper localization in the U.S., likely benefited from these factors, whereas Polestar maintains closer ties with Geely in terms of platforms and software, possibly explaining the differing treatment. Polestar stated it will not appeal the Department of Commerce’s decision. It will continue selling existing inventory of the Polestar 3 and Polestar 4 and maintain its after-sales service network to protect current owners’ interests. Following its exit from the U.S. market, Polestar will focus on Europe, planning to expand its local sales network and advance localized manufacturing.