Polestar will no longer be able to sell new vehicles in the United States starting with the 2027 model year after the U.S. Department of Commerce denied the company an authorization under the Connected Vehicle Rule.
The decision by the Commerce Department’s Bureau of Industry and Security prevents the Swedish premium EV brand from introducing new connected vehicles in the U.S. market because of its ownership structure. Polestar is majority owned by China’s Geely Holding Group, placing it under regulations aimed at manufacturers considered to be under Chinese control.
Existing U.S. Customers Will Continue to Be Supported
While the ruling blocks future model-year sales, Polestar confirmed it will continue selling its remaining inventory of the Polestar 3 and Polestar 4 in the United States. The company also said existing customers will continue to receive full aftersales support, including access to its service network.
Notably, neither model sold in the U.S. is manufactured in China. The Polestar 3 is assembled at Volvo’s plant in Charleston, South Carolina, while the Polestar 4 is produced in South Korea. However, the Connected Vehicle Rule applies based on corporate ownership rather than manufacturing location.
What Is the Connected Vehicle Rule?
The Connected Vehicle Rule was finalized in early 2025 to address national security concerns surrounding connected vehicle technology. The regulation prohibits manufacturers owned, controlled, or directed by China or Russia from selling connected vehicles in the United States beginning with the 2027 model year.
U.S. officials argue that connected vehicles could potentially collect sensitive data or be accessed remotely by foreign governments through software and communications systems. While the rule allows the Commerce Department to grant company-specific authorizations, Polestar’s request was denied.
Interestingly, Volvo—also owned by Geely—received approval earlier this year after discussions with U.S. authorities regarding its governance, technology, and data security practices.
Europe Becomes Polestar’s Primary Growth Market
The U.S. decision is unlikely to have a major impact on Polestar’s global business. The company said 94% of its retail sales during the first quarter of 2026 came from markets outside the United States, with Europe now accounting for nearly 80% of its total retail sales volume.
As a result, Polestar is accelerating its European strategy by expanding its retail network and preparing to localize production of future models.
“Our strategy reflects that, with Europe being our largest growth engine and our plan to manufacture Polestar 7 in Europe,” said Polestar CEO Michael Lohscheller.
The company also plans continued investment in growth markets including Southeast Asia, Eastern Europe, Latin America, and Canada.
Future Product Plans Remain Unchanged
Despite its withdrawal from future U.S. vehicle sales, Polestar says its global product roadmap remains on track.
Customer deliveries of the flagship Polestar 5 are scheduled to begin this summer, while a new variant of the Polestar 4 is expected later this year. The next-generation Polestar 2 is planned for launch in 2027, followed by the Polestar 7 compact SUV, which will be built in Europe.
Although the U.S. market will no longer be part of Polestar’s future sales strategy beginning with the 2027 model year, the automaker says its focus on Europe and other international growth markets positions it for continued expansion as regional automotive policies increasingly shape the global EV industry.
