On the Dash:
- Polestar will not appeal its U.S. ban and will wind down American operations, the WSJ reported.
- State franchise laws may still require the EV maker to compensate dealers for exiting the market.
- Polestar sold just 5,747 U.S. vehicles last year, a fraction of its global sales.
Polestar will not appeal the U.S. government’s decision to bar the automaker from selling new vehicles in the country, the Wall Street Journal reported. The decision locks in Polestar’s exit from the U.S. market.
The U.S. Department of Commerce denied Polestar authorization in June to sell 2027 model-year vehicles under the Connected Vehicle Rule, which restricts Chinese-linked software in connected cars over national security concerns. The EV maker had the option to ask Commerce to reconsider or take the matter to court. It did neither, the Journal reported.
Polestar’s sister brand Volvo, which shares the same Chinese parent company, Geely, secured its own authorization in May to keep selling in the U.S. The U.S. Department of Commerce has not said why the two brands received different outcomes.
Dealers may be owed compensation
The bigger complication for the EV maker may be financial. State franchise laws often require automakers to compensate dealers when they leave a market, and bankruptcy is usually the only way around that obligation, Russell McRory, a New York attorney who represents dealers, told the Journal.
Compensation can include buying back unsold inventory or paying a dealer the fair market value of the franchise, depending on the state. McRory said a government-ordered exit likely doesn’t change that requirement. “A termination is a termination,” he told the Journal.
What it means for Polestar dealers
Polestar’s spokesman told the Journal the company is not terminating its dealerships and will keep working with them through the transition, including continued support for sales, service and aftersales work.
Matthew Haiken, one of Polestar’s largest U.S. dealers and president of Prestige Collection Auto Group, discussed the fallout with CBT News shortly after Polestar’s original exit announcement. “I want to know where we failed in the process,” he said in an interview about the decision’s impact on his store. He told the Journal separately that the news Polestar won’t appeal is “really upsetting to hear.”
However, Polestar dealers will keep selling down existing 2026 inventory while the compensation question plays out state by state. The automaker is offering discounts of up to $25,000 on certain models.
For now, the EV maker says its focus is Europe, where the brand already does the bulk of its business, leaving U.S. dealers to sort out the rest on their own.
