A Polestar 3 comes off the line in Ridgeville, South Carolina, at Volvo's plant outside Charleston. Volvo put $1.3 billion into that site over the last decade, and the SUV shares the SPA2 architecture with the EX90 built in the same building. None of that saved the brand.
The Commerce Department's Bureau of Industry and Security denied Polestar authorization to sell vehicles in the United States starting with the 2027 model year. The trigger was Geely. Polestar is majority-owned by the Chinese conglomerate that also owns Volvo. Washington read the ownership chart and closed the market. You already paid for one, and you are sitting in a car whose maker is not allowed to bring the next model year through the door.
The Chart, Not the Weld
The Connected Vehicle Rule is the mechanism. BIS issued it on January 14, 2025, under authorities from Executive Order 13873, the 2019 national emergency over foreign control of U.S. technology supply chains. It covers passenger vehicles under 10,001 pounds. Software restrictions start with model year 2027. Hardware restrictions wait until model year 2030, or January 1, 2029 for components without a model year. The rule took effect March 17, 2025.
BIS was explicit about the sale ban. Manufacturers owned by, controlled by, or subject to the jurisdiction or direction of China or Russia cannot sell new connected vehicles in the United States that incorporate covered vehicle connectivity systems or automated driving software, even if the vehicle was made in the United States. Telematics control units, Bluetooth, cellular, satellite, and Wi-Fi modules all sit inside that definition. So does the software that lets a car talk outward.
Polestar 3 production is at Ridgeville. Volvo and Polestar announced in March 2026 that they would consolidate global Polestar 3 production there and stop building it in Chengdu. The North American-spec Polestar 4 is assembled in Busan, South Korea. Neither of those factories is in China, and it did not matter, because the rule does not test the weld. It tests who sits above the company that ships the car.
Volvo Cleared the Same Parent
Here's the thing. Volvo and Polestar share an owner. Geely holds roughly 80 percent of Polestar. Volvo Cars, which Geely has controlled since buying it from Ford in 2010, holds another 18 percent. Volvo utilizes a shared Android Automotive software ecosystem across models since the 2020 model year, which made it easier to document which vendors touch a car's connectivity hardware, and still shares Polestar's ultimate parent while landing the opposite paperwork.
On May 26, 2026, Volvo Cars announced it had been granted a specific authorization from Commerce's Office of Information and Communications Technology and Services to keep selling connected vehicles in the United States. Polestar applied under the same rule and got a no in June. On June 25 it filed a Form 6-K and a press release: BIS would not grant authorization from model year 2027 onward, and Polestar would increase its "strategic focus on Europe," where it already does close to 80 percent of retail volume. Ninety-four percent of first-quarter 2026 retail sales were already outside the United States. The U.S. was about 6 percent of that quarter.
In July, Polestar confirmed it would not go back to BIS for another specific authorization. That path is an administrative request for a specific authorization, and Polestar already used it once in June and got a no. Existing Polestar 3 and Polestar 4 inventory can still be sold, and current owners keep the service network on paper. What ends is the next car.
Ohio Sen. Bernie Moreno, who ran dealerships in Cleveland before the Senate, put it in dealer language. "Polestar was screwed by Polestar. It wasn't screwed by the U.S. government." He said Volvo got an exhaustive list and chose to follow it. He said Polestar was reportedly losing $30,000 to $35,000 on every vehicle it sold here, then pointed at the Commerce denial as a way to skip dealer lawsuits under a force majeure clause. Sweden's foreign trade minister, Benjamin Dousa, said he was heavily involved in helping Volvo keep its license and that Polestar had not asked for the same help. Those are their claims. The public record still does not show what Volvo actually changed to clear the bar.
The Letter That Tried to End a Franchise
Prestige Imports operates Prestige Polestar in East Hanover and Polestar Short Hills. Matthew Haiken runs it. On August 12, 2026, Prestige filed in Bergen County Superior Court seeking at least $25 million, a declaration that Polestar violated New Jersey's Franchise Practices Act, payment of the franchise's fair market value, and five years of continued parts and warranty support.
Prestige leaves the federal rule standing. The complaint, as reported, says Polestar spent roughly two years positioning for a U.S. exit while telling dealers the opposite. As recently as early 2025, Prestige says, Polestar leadership called the year the brand's best yet and talked about designing the Polestar 7 with American buyers in mind. In February 2026, four months before the denial, a Polestar executive allegedly approved a multiyear expansion of Prestige's Bergen County store, tied to that model's planned 2028 U.S. launch. June 25 brought the ban. Two weeks later Polestar sent dealers a force majeure letter. Prestige treated that letter as a constructive termination without the 60 days' written notice and "good cause" New Jersey requires. Under N.J.S.A. 56:10-5, good cause is the dealer's failure to meet its own franchise obligations, not the manufacturer's strategy and not, on its face, a federal denial the manufacturer declined to fight. A court has not found those claims.
There are about 32 Polestar dealers in the United States. Polestar says it is not terminating those agreements; it is simply not sending a next car. Roughly 2,800 new Polestars, most of them 2026 Polestar 4s, are sitting in dealer inventory. Haiken told The Drive, "I don't know what I'm going to do with my building. I don't think any of us know what we are going to do with our buildings." About a year before the ban he proposed folding his Polestar operation into a neighboring Volvo store. Volvo corporate turned him down.
The Orphan in the Driveway
You already bought the car, and the immediate paperwork looks intact. Federal safety recall obligations follow the vehicle. Polestar says the service network remains, much of it layered onto existing Volvo dealerships. The warranty, as reported, is four years or 50,000 miles on the vehicle and eight years or 100,000 miles on the battery and motors. Polestar's June 25 release said it will keep selling leftover Polestar 3 and Polestar 4 stock and keep supporting customers. Polestar declined to comment on the Prestige case and said its "primary focus remains on serving our customers." I will take that booklet as far as it goes.
The slower cut is the one you cannot see on the bill of sale. Once new model years stop, the money that keeps dedicated Polestar technicians in the building starts to leave with them. Parts inventory and diagnostic tools thin out behind that. Auto writers already have a name for the discount that shows up at appraisal time: orphan brand risk. Lenders get cautious about residuals, and insurers eventually price the uncertainty around long-term parts and software support. That is a brand with no next car, and a connected vehicle that still needs the company that signed the software.
Three presidential administrations touched this rule, from Trump's 2019 emergency through Biden's Commerce Department finalizing the Connected Vehicle Rule in January 2025. The next Trump administration inherited it and enforced it against Polestar instead of rolling it back. Specific authorizations exist on paper, and Volvo received one while Polestar did not. Ford, in the same season, partnered with Geely on a factory in Valencia, Spain.
Ridgeville is still welding the SUV on the same SPA2 line as the EX90 while leftover Polestar 3 and Polestar 4 stock sells down. Prestige sits in Bergen County court over a force majeure letter and a New Jersey franchise statute, and you are in a driveway with a titled car whose maker has been told it may not sell the 2027.
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