The US Commerce Department denied approval for Polestar’s 2027 electric vehicle to be sold in the United States, effective next year, citing the Connected Vehicles Rule aimed at national security [1, 2, 3, 4]. The rule restricts the use of certain information and communication technologies, including Bluetooth, Wi-Fi, cellular, and some satellite communication in vehicles [1, 2, 3, 4]. It was implemented in January 2025 under the Biden administration and retained under the Trump administration [1, 2, 3, 4].
Polestar, a Swedish electric vehicle brand majority owned by China’s Geely Holding Group, confirmed it will not appeal the ban [1, 2, 3, 4]. The company said it will continue selling its existing Polestar 3 and Polestar 4 models in the US and maintain related connected service networks [1]. "We will continue selling Polestar 3 and Polestar 4 in the US and provide related connected services; we will not appeal the ban," Polestar stated [1].
The ban follows concerns over software, communications, data security, and ownership restrictions affecting Chinese car companies exporting to the US [4]. Polestar’s stock price dropped between 6.3% and 13.5% on June 25 after the announcement, closing at $18.97 per share with intraday lows near $17.44 [1, 2, 5, 3, 4].
Polestar’s Polestar 3 model is produced both in the US at Volvo’s South Carolina plant and in Chengdu, China [3]. A Volvo spokesperson said, "Production in Chengdu has not stopped; it is too early to assess if the recent developments will change existing plans" [3].
US lawmakers have proposed tougher restrictions, including higher tariffs on Chinese electric vehicles, signaling further pressure on imports [1, 2, 3]. Polestar plans to shift growth focus toward Europe, its largest market with 78% of sales volume in Q1 2026 compared to 6% in the US [4]. Polestar CEO Michael Lohscheller said, "The automotive industry is entering a new stage focusing on regional dynamics; Europe will be our largest growth engine and Polestar 7 will be produced there" [4].
The Connected Vehicles Rule will continue to impact vehicle imports, with the Polestar 2027 model ban as an early example. Polestar’s sales of current models in the US will proceed uninterrupted following the June 25 announcement [1, 2, 3, 4].
