US to ban Polestar sales from 2027 over China software ties

The US Department of Commerce denied Polestar authorization to sell vehicles in the US starting with the 2027 model year, citing the Biden-era Connected Vehicle Rule, which bans the import and sale of vehicles containing software from China and Russia. Polestar, majority owned by China’s Geely, will continue to sell existing Polestar 3 and Polestar 4 stock and honor all existing warranties and service commitments, but will not market or sell new model year 2027 vehicles in the country. Although the decision itself was not a surprise, shares fell 6.3% on the breaking news. Polestar had warned as early as 2024 that the rule would keep it out of the US market, and the company made no effort to appeal the decision. The US is not a core market for an electric vehicle (EV) manufacturer; It accounted for just 6% of sales in the first quarter of 2026, compared to 78% in Europe, meaning the commercial impact is limited. Still, the blow to its reputation and the precedent it sets for other Geely brands could be quite significant. Volvo Cars received a separate authorization allowing it to effectively resume U.S. sales in May 2026. It still needs to demonstrate compliance with the rule’s specifications across its product range. Lotus, which produces the Eletre SUV and Emeya GT in China, has not yet made a decision and remains in an uncertain situation. Ford is also pursuing authorization for the Chinese-made Lincoln Nautilus; This suggests that the scope of the rule extends beyond just Chinese-owned brands to any vehicle with software exposed to China’s automotive supply chain. Polestar’s response was mainly to accelerate its expansion in Europe. Reuters quotes Chief Executive Michael Lohscheller describing Europe as the company’s “biggest growth engine” and confirmed that the Polestar 7 compact SUV will be produced at Volvo’s planned plant in Slovakia. Having a manufacturing base in Europe does more than circumvent the EU’s tariff regime for Chinese-made electric vehicles; It could help protect Polestar from US connected car rules and EU import tariffs on Chinese-made vehicles. Polestar 7 has not been announced yet and is planned to be produced in 2028. Canada is also clearly named as an ever-growing market alongside Southeast Asia, Eastern Europe and Latin America. Polestar reintroduced the 2027 Polestar 2 to the Canadian market in June, using it as a North American base out of the reach of the US ban. Mexico’s restrictive measures against non-FTA partners, which it introduced in January, make it a more difficult entry point, but Canada’s quota-based access regime (49,000 units per year, 6.1% tariff across all automakers) remains in place. The Polestar ban is a preview of the structural reclassification the US government is driving across the entire connected car space. The rule does not distinguish between a Chinese automaker and a Swedish automaker with Chinese ownership; What it targets is software source and data management. This logic, applied consistently, will eventually reach every vehicle with significant Chinese software or component content, including models from older brands that have not yet received a decision and are not supported for a decision. The ban is in place because Polestar is already in a fragile financial situation. The company demanded continued capital injections from Geely and its chairman Li Shufu; its shares fell sharply enough to require a reverse stock split to maintain its Nasdaq listing; and without an all-new model up to the 7, Polestar is refreshing aging models rather than launching new ones under tariff pressure. Record sales in the first quarters of 2025 and 2026 provide a valid basis for optimism about the automaker’s prospects in Europe. Yet these results were obtained before US exit was approved; Although the contribution of this market is now very small, it was still part of the brand’s growth calculation. Insulated from both sets of rules, the Slovakian-made Polestar 7 may be the company’s single most important product decision in the long run. The Polestar decision is also the clearest signal yet on how the Connected Vehicle Rule will be implemented in practice. Other automakers currently pushing for authorization, including those with far more clout in the U.S. than Polestar, are now watching to see whether Geely’s ownership structure is particularly disqualifying or whether the rule’s software and data provisions will accommodate architectural changes in how vehicles communicate.

Information: This content was prepared and published using AutomobileMagazine’s artificial intelligence-supported publishing system, in line with the information shared by international automotive manufacturers and reliable press sources.