By Marie Mannes and David Shepardson
STOCKHOLM/WASHINGTON, June 25 (Reuters) – Polestar announced on Thursday that the Trump administration’s ongoing regulatory push will force the electric‑vehicle manufacturer to halt U.S. sales from the 2027 model year onward, citing a heightened crackdown on vehicles linked to China.
Polestar shares slipped 5.7 % in early trading.
The U.S. Commerce Department declined to grant Polestar authorization under the Connected Vehicles Rule, which bars the import and sale of cars whose connected‑vehicle technology is tied to China beginning with the 2027 model year.
The rule covers Bluetooth, Wi‑Fi, cellular and certain satellite communication technologies, reflecting national‑security concerns about vehicles’ ability to collect sensitive data from American owners.
Introduced in January 2025 under President Joe Biden, the rule has remained in effect under the Trump administration.
This move represents the latest significant step by the United States to restrict vehicles manufactured and exported from China, as Washington seeks to bolster its domestic automotive industry.
Lawmakers have proposed additional legislation to tighten the restrictions, while Chinese EV imports already face steep tariffs.
The Sweden‑based firm, which is majority‑owned by China’s Geely Holding, said it will continue selling its existing Polestar 3 and Polestar 4 models in the U.S. and will maintain access to its service network.
The Commerce Department offered no immediate comment.
Polestar had warned as early as 2024 that the Connected Vehicles Rule would “effectively prohibit” the company from selling any vehicles in the United States, even those produced domestically.
“The automotive industry is entering a new phase, driven by regional dynamics. Our strategy reflects that, with Europe as our largest growth engine and plans to manufacture the Polestar 7 in Europe,” said Polestar CEO Michael Lohscheller.
Sales in Europe have become Polestar’s primary focus, as U.S. market performance remains weak amid heightened competition and slower consumer spending.
In the first quarter, just 6 % of Polestar’s sales originated from the United States, compared with 78 % from Europe.
The company has yet to achieve profitability and has relied on repeated capital injections from its parent, Geely, and its chairman, Li Shufu.
A sharp decline in its share price forced Polestar to execute a reverse stock split last year to preserve its Nasdaq listing.
Automakers such as Ford are racing to secure U.S. government approval to keep selling models that have been on dealer lots for years, even as those vehicles face new regulatory scrutiny.
Volvo Cars, Polestar’s sister brand and co‑founder, said in May it had obtained an authorization under the rule but must still comply with its specifications across its U.S. lineup. Volvo noted that its ownership structure required a separate clearance.
The decision casts uncertainty over the future of the Polestar 3, the brand’s sole U.S.–produced model.
Volvo Cars, which builds some Polestar vehicles, announced in March plans to consolidate Polestar 3 production at its South Carolina plant, ending the model’s Chinese manufacturing at Chengdu.
A Volvo spokesperson said on Thursday that production in China has not yet been stopped, and that it is too early to determine whether the latest development will alter those plans.
Faced with tariff pressures, Polestar has chosen to refresh aging models rather than launch entirely new vehicles.
The company expects deliveries of a new Polestar 4 variant to begin later this year, followed by a revised Polestar 2 sedan in 2027.
The next fully‑new Polestar model, the compact Polestar 7 SUV, is scheduled for production at Volvo’s upcoming factory in Slovakia.
(Reporting by David Shepardson in Washington and Zaheer Kachwala in Bengaluru; Editing by Pooja Desai and Josephine Mason)
