US Bans Polestar EVs From 2027 Under Connected-Vehicle Rule

Key Facts

1The U.S. Department of Commerce's Bureau of Industry and Security denied Polestar authorization to sell model-year 2027 and later vehicles in the U.S. under the connected-vehicle rule.

2Polestar said it is increasing its strategic focus on Europe, noting that 94% of its Q1 2026 retail sales of 13,126 vehicles came from outside the U.S. market.

3Citi analyst Ross MacDonald noted that Polestar did not receive the favorable authorization that Volvo Cars got in May 2026, potentially giving Volvo an advantage.

In a new escalation of US-China tech tensions, the Commerce Department's Bureau of Industry and Security denied Polestar authorization to sell model-year 2027 and later electric vehicles in the United States under the connected-vehicle rule targeting Chinese-linked technology. According to reports, the Geely-owned company said it is increasing its strategic focus on Europe, noting that 94% of its 13,126 retail sales in Q1 2026 came from outside the US market.

The move follows Volvo Cars (also owned by Geely) receiving favorable authorization in May 2026, potentially giving it a competitive edge in the US, according to Citi analyst Ross MacDonald. The US rule targets companies with Chinese links to mitigate national security risks from connected vehicles, leaving Polestar in a difficult position despite its currently low direct US exposure.

As Polestar pivots to Europe, investors are watching new car sales in the EU, which showed a 3.2% year-on-year rise in May 2026 per market data. Markets also await further regulatory moves affecting Chinese-linked EV makers, while Polestar's next quarterly report will be closely watched to gauge the strategic shift's impact.