The U.S. government’s Connected Vehicle Rule blocks the sale of cars utilizing connectivity software developed or maintained by Chinese or Russian entities, starting with the 2027 model year. Because Polestar is majority-owned by the Chinese automotive conglomerate Geely, the restrictions effectively lock the brand out of the American market. Following the news, Polestar shares plummeted by over 13% in midday trading, News.Az reports, citing Yahoo Finance.
The ban highlights the rigid enforcement of the tech regulations, which target the national origin of a vehicle’s software and supply chain rather than where it is physically assembled. The flagship Polestar 3 SUV is manufactured on American soil at a Volvo plant in South Carolina, yet it was still barred due to Geely’s ownership stake.
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In a surprising twist, sister brand Volvo—which is also owned by Geely and shares manufacturing lines and vehicle platforms with Polestar—received a special waiver from the Commerce Department to continue its U.S. operations. Volvo attributed its successful exemption to extensive, case-by-case discussions with U.S. officials regarding its corporate governance, data privacy protocols, and technology stack. Polestar was unable to secure a similar clearance.
Faced with the U.S. shutdown, Polestar plans to wind down its domestic sales and marketing operations and pivot its corporate focus heavily toward the European market, where it already generates nearly 80% of its business.
The EV maker reassured current American drivers that it will not completely abandon them. Polestar confirmed it will sell through its existing stock of 2026 models and that current owners and lease holders will face no disruptions to vehicle servicing, support, or active warranties.
