Polestar Forced to Exit U.S. Market by 2027 After Denial of Connected Vehicle Authorization

Polestar announced Thursday that it will cease selling vehicles in the United States beginning with the 2027 model year after the Commerce Department’s Bureau of Industry and Security (BIS) declined to grant the automaker authorization under the new Connected Vehicles Rule.

The regulation, which restricts the import and sale of vehicles equipped with connected technologies linked to China, covers systems including Bluetooth, wireless internet, cellular connectivity, and certain satellite communications. Finalized in January 2025 during the Biden administration, the rule remains in force under President Donald Trump, citing national security risks related to the potential collection of sensitive data from American drivers.

Polestar will be banned from selling EVs in the U.S. starting with the 2027 model year due to the Connected Vehicles Rule. (Justin Sullivan/Getty Images)

Chief Executive Michael Lohscheller stated the company will shift its strategic focus toward Europe, noting that 94% of Polestar’s retail sales volume in the first quarter of 2026 originated from markets outside the U.S.

“The automotive industry is entering a new phase defined by regional dynamics,” Lohscheller said. “Our strategy reflects that reality, with Europe serving as our largest growth engine and our plan to manufacture the Polestar 7 there.”

He highlighted record sales in 2025 and the first quarter of 2026, alongside several new European market launches scheduled for this year. The company also intends to continue investing in growth opportunities across Southeast Asia, Eastern Europe, Latin America, and Canada.

Headquartered in Sweden, Polestar is majority-owned by China’s Geely Holding Co. The company has faced persistent profitability challenges, relying on repeated capital infusions from Geely and executing a reverse stock split last year to maintain its Nasdaq listing.

Following the BIS decision, Polestar will continue to sell its existing inventory of Polestar 3 and Polestar 4 models in the U.S. and maintain customer support through its service network.

Most of Polestar’s retail sales have been in Europe. (Sjoerd van der Wal/Getty Images)

Volvo Cars, which produces certain Polestar models and operates as a sister brand, announced in March it would consolidate Polestar 3 production at its South Carolina facility rather than splitting output with China. A Volvo spokesperson said it is too early to determine if the Commerce Department’s ruling will alter those manufacturing plans. The Polestar 3 is currently the automaker’s only U.S.-built model.

Reuters contributed to this report.

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