The US Commerce Department's Bureau of Industry and Security has denied Polestar authorisation to sell vehicles in the United States starting with the 2027 model year. The company announced the decision Thursday.
The block comes under the Connected Vehicle Rule — a regulation introduced in the final days of the Biden administration and kept in place under Trump. It bars connected vehicle manufacturers owned, controlled by, or subject to the direction of China or Russia from selling in the US market.
"Companies from these countries may be compelled to share data or allow remote access to connected vehicles in the United States," the rule states.
The rule specifically targets the data risk embedded in modern connected vehicles — cars that collect location data, driver behaviour, camera footage, and real-time network information. Regulators argue that Chinese ownership creates a pathway for that data to reach the Chinese government under Beijing's national security laws.
Why Polestar Is Caught
Polestar is majority owned by Geely, a Chinese automaker, and its chairman Li Shufu. That ownership places it directly within the rule's scope.
Geely also owns Volvo. Volvo was granted a waiver by the Commerce Department in May. Polestar was not.
The distinction matters. Volvo, though Geely-owned, operates with a higher degree of operational independence and has a longer-established presence in the US market. Polestar was spun out of Volvo in 2017 and remains more tightly linked to Geely's corporate structure — a factor that appears to have influenced the Bureau's decision.
Neither the Commerce Department nor Geely responded to requests for comment.
The Manufacturing Contradiction
Polestar's US-sold vehicles are not built in China. The Polestar 3 is manufactured at a Volvo plant in Charleston, South Carolina. The Polestar 4 is built in South Korea.
The rule does not consider where vehicles are assembled. It targets ownership structure and software origin.
This creates a situation where an electric vehicle built by American workers in South Carolina cannot be sold in America — because its parent company is Chinese. It is a distinction that is likely to fuel further legal and political debate as more Chinese-owned but US-manufactured products enter the regulatory crosshairs.
Existing Inventory and Customers
Polestar said it will sell through its current stock of Polestar 3 and Polestar 4 models already in the US. Service network access for existing customers remains in place.
New US sales beyond existing inventory will not happen. The company is shifting future growth to Europe, where 80% of its sales already occur.
Europe has not moved to apply equivalent restrictions. That regulatory gap means Polestar can continue scaling on the continent while its US chapter effectively closes.
Geely's Global Footprint
Geely is not a fringe player. Beyond Polestar and Volvo, the Chinese automaker holds stakes in Mercedes-Benz, owns Lotus, and controls London EV Company, the maker of the iconic black cab. It is one of the most acquisitive automotive groups of the past decade.
That scale is precisely what concerns US regulators. A single corporate parent with Chinese government exposure sitting above brands spread across Europe, the UK, and previously the US represents the kind of structural risk the Connected Vehicle Rule was designed to address.
China's EV Ambitions and US Pushback
China is the world's largest car manufacturer and its biggest EV exporter. Domestic brands including BYD, SAIC, and Chery have expanded aggressively across Southeast Asia, Europe, and Africa over the past three years.
High US tariff rates — currently above 100% on Chinese-made EVs — have kept Chinese-branded vehicles out of the American market. The Connected Vehicle Rule adds a second layer, extending restrictions to foreign-owned companies with Chinese corporate control, regardless of where they build their cars.
The combined effect is a near-total closure of the US EV market to Chinese corporate influence, whether through direct imports or ownership structures.
| Automaker | Chinese Owner | US Sales Status |
|---|---|---|
| Polestar | Geely | Banned from 2027 |
| Volvo | Geely | Waiver granted |
| BYD | State-linked | Blocked by tariffs |
| Lotus | Geely | Limited US presence |
What It Means for EV Buyers
For US consumers, fewer competitors in the EV market means less pricing pressure on domestic and allied brands. Tesla, GM, Ford, Hyundai, and Kia are the primary beneficiaries of a market that continues to narrow its acceptable supplier list on national security grounds.
Polestar had positioned itself as a premium alternative in the $50,000–$70,000 EV bracket. That space now has one fewer option from the 2027 model year.
For investors and market watchers tracking how regulatory shifts are reshaping the EV and technology investment landscape, the AI investment tools Nigeria guide covers how policy-driven disruption is changing where capital flows — and the cryptocurrency trading beginner guide addresses how broader tech nationalism is influencing digital asset markets.
Sources: Polestar company statement, US Bureau of Industry and Security Connected Vehicle Rule, Volvo Cars press release, CNN, Reuters EV market data.
— WealthBlueprint NewsDesk