Polestar claims it was blindsided by sales ban
Polestar has told its US dealers that the Trump administration's Commerce Department rejected its application to keep selling electric vehicles in America under a rule banning connected vehicle software from countries such as China, despite months of meetings that led the company to expect approval. This matters because sister company Volvo, which shares similar Chinese ownership through Geely, was approved to continue selling in the US just a month earlier, leaving Polestar unable to obtain a clear explanation for the differing outcomes and now facing the end of its US sales from the 2027 model year.
In an 18 August letter, Polestar's head of product, Peter Wexler, detailed the timeline since the firm's application to the Bureau of Industry and Security on 29 May 2025, noting that a senior Commerce official had indicated approval would be reasonable given the Polestar 3's similarity to the approved Volvo EX90. Polestar says it offered mitigation measures, including audits, data storage restrictions and limits on remote access, but claims regulators declined to discuss these before denying the application. The company is still pressing for a reason behind the rejection and separately faces a lawsuit from New Jersey dealer Prestige Imports, which alleges Polestar engineered its own US exit by failing to satisfy regulators.
- Trump administration denied Polestar's bid to keep selling EVs in the US.
- Sister firm Volvo was approved under similar Chinese ownership rules.
- Polestar says regulators ignored proposed compliance fixes before rejecting it.
New here? Start with this
Polestar is an electric vehicle maker that grew out of Volvo and is now listed separately, though it remains linked to Volvo through their shared major shareholder, the Chinese car giant Geely. Both firms sell cars in the United States, but American rules now restrict vehicles containing connected software from countries such as China, over concerns about data and remote access. That policy is enforced by the Commerce Department's Bureau of Industry and Security, which vehicle makers must apply to for permission to keep selling.
Polestar applied for approval in May 2025 and says it was encouraged by officials to expect a positive outcome, partly because its cars are closely related in design to Volvo models that had already been cleared to continue US sales. When Polestar's own application was turned down, it left the company facing the loss of its US market from the 2027 model year, a significant blow given how central America is to its growth plans as a smaller, newer brand competing against established rivals.
The case matters beyond one company because it raises questions about how consistently the rules are being applied to firms with similar Chinese ownership links, and about what recourse a business has when a government decision affects its future without a clear explanation. Polestar's dispute with regulators is unfolding alongside separate legal action from one of its own dealers, adding further uncertainty to the situation.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Advocates of the Commerce Department's decision argue that national security reviews of connected-vehicle software from Chinese-linked manufacturers must be rigorous and cannot be dictated by precedent or a company's expectations built up in meetings. They would say regulators are entitled to weigh each application on its specific facts, that a rule intended to close risks around remote access and data flows should err on the side of caution even if that produces outcomes that look inconsistent from the outside, and that Polestar's proposed mitigations may simply have been judged insufficient once scrutinised in full. On this view, protecting critical infrastructure and personal data from foreign access justifies a strict, even opaque, process, and companies operating in a sensitive sector should expect that approval is never guaranteed regardless of informal encouragement received along the way.
The case against
Polestar and its sympathisers would argue that a regulatory process which spends months in meetings, offers verbal indications that approval is reasonable, and then rejects an application without explanation or engagement on proposed safeguards fails basic standards of fairness and predictability that businesses are entitled to expect from government. They would point to the approval of the closely related Volvo EX90 as evidence that the decision appears arbitrary rather than principled, leaving a company that invested in good-faith compliance efforts unable to understand what it did wrong or how to fix it. From this perspective, due process, transparency and consistent application of rules matter not just to the company involved but to any investor or manufacturer trying to operate lawfully in a market shaped by unpredictable regulatory judgement calls.
Americas Asia Celebrity Entertainment Software Technology World