Polestar is challenging the U.S. decision to block its vehicle sales, pointing to what it describes as possible “disparate treatment” after Volvo was allowed to continue selling vehicles in the country despite sharing the same majority Chinese owner.
Polestar Questions the Approval Process
According to Automotive News, Polestar had reason to expect approval as recently as April 2026. The Commerce Department denied the automaker’s applications in June, preventing it from selling 2027-model-year and newer vehicles to American buyers.
Polestar and Volvo are both majority owned by Geely Holding Group. Polestar, which sells electric vehicles including the Polestar 3, filed its first U.S. sales-authorization application with the Commerce Department’s Bureau of Industry and Security in May 2025.
The agency reviewed the application over the following months and asked Polestar detailed questions. The Geely-owned EV maker said it offered to discuss safeguards that included audits, cybersecurity reviews and removing any China-linked involvement from its data management.
In January 2026, agency officials reportedly told Polestar’s outside counsel that they had enough information and were preparing to recommend approval. In April, a Commerce Department official reportedly said it would be reasonable for Polestar to expect approval if Volvo received clearance under the same ownership structure and with the same hardware and software.
Volvo received authorization in May. Polestar’s applications were then denied the following month, creating a different outcome for the two automakers.
New Jersey Dealer Group Sues Polestar
The dispute comes as Polestar also faces a lawsuit from a New Jersey dealer group seeking at least $25 million. The group alleges that Polestar violated the state’s Franchise Practices Act.
The lawsuit claims Polestar had planned to leave the U.S. about two years earlier and rejected the automaker’s “force majeure” argument that the sales ban was beyond its control.
The conflicting claims add another layer to Polestar’s efforts to remain in the U.S. market. While the automaker has pushed back against the sales restrictions, the lawsuit presents a different account of its plans for the American market.
Why the U.S. Ban Extends Beyond Vehicle Production
The U.S. Connected Vehicles Rule was imposed over national security concerns, including the possibility that foreign adversaries could collect sensitive data or remotely manipulate connected vehicles through linked software and hardware.
Polestar’s Polestar 3 is built at the same South Carolina plant as the Volvo EX90. However, the dispute centers on more than where a vehicle is assembled, with ownership and connected-vehicle technology also playing a role.
Mercedes-Benz could also be affected by a proposed Senate bill targeting automakers with more than 15% Chinese ownership. Nearly 20% of Mercedes-Benz is owned by Chinese investors.
Polestar Promises Continued Customer Support
Despite the looming ban, Polestar has assured customers that it will continue providing support, including honoring warranties and offering service and repairs.
The company will also seek further discussions that could eventually allow it to resume new-vehicle sales in the United States.
