The Chinese-owned electric brand, Polestar, has announced it will be abandoning the United States after the Commerce Department refused to grant it permission to continue selling new cars. This decision marks the first casualty of a sweeping American clampdown on Chinese technology in vehicles.
The move is part of a new rule that restricts the import or sale of cars whose hardware and software are tied to China on national-security grounds. The rule, which took effect in March 2025, requires carmakers to certify that their products carry no code written in China or by a Chinese company, or to petition for authorisation to keep selling from the 2027 model year onwards.
Polestar had applied for a waiver to continue selling new cars, but the Commerce Department denied its request. The company will continue to sell its existing stock and honour servicing and repairs through its existing network, leaving current owners covered.
The decision is a significant blow to Polestar, which was founded as Volvo's performance and motorsport arm and became a standalone brand in 2017. The company had been hoping to maintain a presence in the US market, which is one of the world's most valuable car markets.
Polestar's Chinese ties had already proved costly, with punitive tariffs imposed by both the Biden and Trump administrations pushing the China-built Polestar 2 out of the American range. The company will now focus on shoring up its European business, which already accounts for roughly 80 per cent of global sales.
The rejection is the latest step in a broader American push to wall off Chinese-owned cars. Lawmakers have spent recent weeks floating legislation that would go further still, barring Chinese manufacturers from even building vehicles on US soil.
Polestar's CEO, Michael Lohscheller, has stated that the global car market is fragmenting along geographic lines, and that the company will now concentrate on regional dynamics. The US market may be closed to Polestar, but the company remains committed to its ambitions in other regions.
The decision highlights the complexities of global trade and the challenges faced by carmakers with ties to China. As the world's most valuable car market, the US presents a significant opportunity for companies like Polestar, but the country's restrictions on Chinese technology in vehicles have effectively shut the door on new sales.
Polestar's pivot to Europe marks a significant shift in the company's strategy, as it seeks to expand its presence in a region with strict regulations on electric vehicles. The company's Chinese ties had already proved a challenge, but the US decision has presented a significant opportunity for the company to refocus its efforts.
