Polestar Says It Was Blindsided by U.S. Sales Ban

Polestar says it is still seeking answers from the U.S. Commerce Department after being denied permission to sell new vehicles in the United States, despite Volvo Cars receiving approval to remain in the market.

The Chinese-owned EV maker told its U.S. dealers in an Aug. 18 letter that it had expected to receive approval under the new Connected Vehicles rule after months of discussions with Commerce officials. The company was ultimately denied on June 24, making Polestar the first automaker effectively blocked from the U.S. under the rule.

Polestar and Volvo Cars share the same Chinese majority owner, Zhejiang Geely Holding Group. The companies also have vehicles with closely related hardware and software, while the Polestar 3 and Volvo EX90 are produced on the same line at Volvo’s plant in South Carolina.

Polestar seeks explanation for different treatment

Peter Wexler, Polestar’s U.S. head of product, retail network and government affairs, said the company is focused on obtaining the information it needs to understand why its application was rejected.

Polestar had submitted multiple rounds of information to Commerce officials in 2025 as part of its application under the Connected Vehicles rule, according to The Wall Street Journal.

According to Wexler’s letter, Commerce officials had indicated that Polestar’s application was moving toward approval. In April, Commerce Under Secretary for Industry and Security Jeffrey Kessler reportedly told Polestar management that approval for Polestar would be a reasonable expectation if Volvo also received approval.

Polestar also proposed several possible mitigation measures, including restrictions on where vehicle data could be stored and who could access it. The company offered additional auditing and reporting requirements, as well as independent cybersecurity assessments.

Commerce approved Volvo’s application in May, and Polestar’s application was rejected the following month.

Polestar and Volvo have significant similarities

The different outcomes have raised questions among Polestar’s U.S. dealers, particularly because the two brands have substantial corporate and technical connections.

Both companies are majority owned by Zhejiang Geely Holding Group. The Polestar 3 and Volvo EX90 are also built on the same production line in South Carolina and use closely related hardware and software.

Polestar’s letter specifically pointed to the Volvo EX90 as being essentially the same as the Polestar 3 in terms of its software stack.

Polestar also sells the Polestar 4 in the U.S., although that vehicle is produced in South Korea. The company began South Korean production in part to avoid the high U.S. tariffs imposed on EVs imported from China.

U.S. sales will continue for existing inventory

The Commerce Department’s decision applies to vehicles from the 2027 model year onward, meaning Polestar can continue selling vehicles already in the United States.

The company is now offering steep discounts to clear its remaining inventory.

Polestar sold fewer than 6,000 vehicles in the U.S. last year, representing about 6% of its global sales. The company has nearly three dozen U.S. dealers, with most also operating Volvo franchises.

Those dealers have sought answers about the different treatment of Polestar and Volvo. At least one dealer has also filed a lawsuit against Polestar seeking at least $25 million in damages after investing in a Polestar showroom.

Despite describing the denial as contrary to law, Polestar has said it will not appeal the decision. Instead, the company plans to focus on expanding its European business.

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