Polestar has been officially denied to sell cars in the United States as of 2027. After the brand retreated from China due to low adoption, the luxury EV maker now also faces losing the second-largest car market in the world. The company will focus largely on Europe. But that is still the backyard of German premium.
Safety risk
Polestar manufactures cars in the U.S., as the 3 is built at Volvo’s plant in Charleston, but under formal law, that’s no longer a guarantee of market access.
The American Bureau of Industry and Security had denied commercial authorization for the brand under the Connected Vehicle Rule (CVR). This national security policy was adopted in January 2025 and bars connected vehicles with a “sufficient nexus” to China (or any other country deemed a national safety risk)
These software restrictions start in 2027, and hardware rules follow in 2030. Bluetooth, cellular modules, telematics, GPS – anything that links the car to the cloud – falls under the rule.
Polestar was informed some time ago and has been actively scouting for new suppliers to resolve the problem. Apparently, that plan fell through.
Volvo still allowed
Surprisingly, Volvo, which produces the EX90 as a sister model to the 3 on the same technology, was granted authorization last month to keep selling connected cars: same Chinese owner, same car underneath, but different bureaucratic fate.
According to American news outlet Car and Driver, Volvo operates as a separately listed, more established automaker with a large US footprint. At the same time, Polestar is more tightly bound to Geely’s shared platforms and software stack. But whatever the precise reasoning is inside the Commerce Department, it does sound like two weights, two measures.
Low numbers
Polestar responded that it will not appeal the decision. It will continue selling existing stock of the Polestar 3 and Polestar 4 in the US, and its 32 American dealers will remain open to wind down inventory and provide service.
Current owners keep their warranties. But anyone holding out for the Polestar 5 grand tourer or the 6 roadster can stop waiting. They are not coming to America this decade. The latter was already put on hold, and the new decision might seal its fate altogether.
The exit sounds dramatic, given the sheer size of the US market, but the numbers tell a softer story. Only 6% of Polestar’s retail sales in the first quarter of 2026 came from the United States. Europe accounted for 78%. Of first-quarter volumes, 94% were from markets outside the US.
CEO Michael Lohscheller is leaning in. “The automotive industry is entering a new phase, based on regional dynamics,” he said. “Our strategy reflects that, with Europe being our largest growth engine, and our plan to manufacture Polestar 7 in Europe.” The upcoming compact SUV is expected to be built at Volvo’s planned factory in Slovakia.
American BEV sales on the rise
However, Polestar’s retreat comes at an ironic moment. As the death of federal EV tax credits in September last year seemed to kill American appetite for battery-electric cars, momentum is rising again.
May 2026 was the strongest month for American EV sales since the subsidies disappeared. More than 85,000 EVs have found buyers. Rising fuel prices over the Iran war help explain the boost. But the trend is there: Americans are also buying BEVs without government help. Polestar will not be there to take the orders.
Thus, denial is another blow to a balance sheet that was already looking bleak. Polestar delivered a record 60,000-plus cars in 2025 and notched a record first quarter of 13,126 deliveries in Q1 2026.
But gross margin collapsed to negative 3.2% in the first quarter, down from positive 10.3% a year earlier. The brand has survived on repeated capital injections from Geely and chairman Li Shufu. Polestar will keep selling in Canada, a small test market that leaves the door ajar for a future American return if politics or ownership structures should shift.
