Polestar, the Swedish EV Maker Owned by China's Geely, Blocked in the US

In late June 2026, the US Department of Commerce, through its Bureau of Industry and Security, refused to grant Polestar the authorization it needs to keep selling new vehicles in the United States. The decision blocks the Swedish electric vehicle brand from offering model-year 2027 cars and any newer models on the US market. Polestar confirmed the ruling on 25 June 2026 and has since stated that it will not appeal.

The action falls under the Connected Vehicle Rule, a regulation finalized in January 2025 during the final days of the Biden administration and kept in place under the Trump administration. The rule bars connected vehicles with software or connectivity hardware linked to China or Russia on national security grounds. Regulators argue that cameras, GPS, cellular modules and automated driving software in these cars could be used to collect data on American drivers or allow remote access. Software restrictions take effect with the 2027 model year, while hardware restrictions are scheduled to follow later in the decade.

Polestar's core issue is ownership rather than assembly location. The brand is majority owned by China's Geely Holding, and that link is what triggers the rule. The point is underlined by the Polestar 3, the company's only US-built model, which is assembled at Volvo's plant in Ridgeville, South Carolina. Even though this SUV rolls off an American production line, it still cannot be sold as a 2027 model. Volvo consolidated global Polestar 3 production in Ridgeville earlier in 2026, ending parallel assembly in Chengdu, China, partly to avoid steep US import tariffs. That move did not shield Polestar from the connected vehicle restrictions.

A striking feature of the case is the different treatment of two brands under the same parent. Volvo, also majority owned by Geely, received an authorization on 26 May 2026 that lets it keep selling connected vehicles in the US. Polestar's application was rejected about a month later. Neither the companies nor US authorities have fully explained the split. Analysts point to Volvo's larger and longer US presence, its separate corporate structure, and its reliance on European data infrastructure, while Polestar shares more platforms and software with Geely brands and leans on servers in China.

For Polestar, the direct commercial hit is contained. The company reported that only around 6 percent of its first-quarter 2026 retail volume came from the US, with close to 80 percent of sales in Europe. Polestar posted record deliveries of 13,126 cars in the first quarter of 2026, up 7 percent year on year, almost entirely outside America. As of early July 2026, Polestar continues to sell remaining stock of the Polestar 3 and Polestar 4 in the US and says it will keep servicing existing customers through its dealer network.

Chief executive Michael Lohscheller has responded by tilting strategy toward Europe, which he calls the brand's largest growth engine. The upcoming Polestar 7 compact SUV is planned for production at Volvo's plant in Kosice, Slovakia, from 2028. Polestar also intends to keep investing in Southeast Asia, Eastern Europe, Latin America and Canada.

The wider significance lies in the precedent. The ruling shows that the Connected Vehicle Rule can shut out a Swedish-branded, partly US-built vehicle purely because of Chinese ownership upstream. Other automakers with China-built models are now exposed. Lincoln and Buick, which sell the China-built Nautilus and Envision in the US, face the same authorization hurdle, and Ford is reported to be in talks with the Commerce Department over the Nautilus. The case signals that US-China technology decoupling is reaching consumer markets, giving Washington a precise lever to admit or block individual companies without new tariffs.