Polestar vehicles and cargo ship at port under overcast sky.
Polestar, the electric vehicle manufacturer, announced on Thursday that it will be compelled to cease sales in the U.S. starting with the 2027 model year. This directive stems from a new regulation enacted by the Trump administration, aimed at restricting vehicles with connected technology linked to China, citing national security concerns.
The Commerce Department’s Bureau of Industry and Security (BIS) denied Polestar the necessary authorization to sell its vehicles under the Connected Vehicles Rules. These rules specifically target the importation and sale of vehicles equipped with connected vehicle technology that has ties to China, due to potential risks associated with the collection of sensitive data on American consumers.
Technologies such as Bluetooth, wireless internet, cellular connectivity, and certain satellite communication systems fall under these regulations. The rule was initially adopted in January 2025 during the Biden administration and has remained in effect under President Donald Trump.
In response to this development, Polestar CEO Michael Lohscheller stated that the company will be shifting its strategic focus towards Europe. He noted that 94% of Polestar’s retail sales in the first quarter of 2026 originated from markets outside the U.S. “The automotive industry is entering a new phase, based on regional dynamics,” Lohscheller said. “Our strategy reflects that, with Europe being our largest growth engine and our plan to manufacture Polestar 7 in Europe.” The company also plans to continue investing in growth markets across Southeast Asia, Eastern Europe, Latin America, and Canada.
Polestar, which is headquartered in Sweden, is majority-owned by China’s Geely Holding Co. The company has faced financial challenges, requiring repeated capital infusions from Geely. Its share price has seen a significant decline, leading to a reverse stock split last year to maintain its listing on the Nasdaq exchange.
Following the Commerce Department’s decision, Polestar will continue to sell its existing inventory of Polestar 3 and Polestar 4 vehicles in the U.S. and will provide ongoing customer support through its service network. Volvo, a sister brand to Polestar and a producer of some of its vehicles, had previously announced plans to consolidate Polestar 3 production at its South Carolina plant, shifting it from China. It remains unclear if this decision will alter those plans.
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