Polestar says the Commerce Department is banning US sales of its cars

By Chris Isidore, CNN

(CNN) — Electric vehicle maker Polestar is being forced out of the American market due to its ties to China, following a decision by the US Commerce Department, the company announced Thursday.

The company said the Commerce Department’s Bureau of Industry and Security denied the company an authorization to sell vehicles, starting with the 2027 model year, under a regulation known as the Connected Vehicle Rule.

The rule, instituted during the final days of the Biden administration and kept under the Trump administration, cites national security concerns to ​ban “connected vehicle manufacturers owned by, controlled by, or subject to the jurisdiction or direction of China or Russia, and vehicles using their covered software.”

“Companies from these countries may be compelled to share data or allow remote access to connected vehicles in the United States,” the notice of the rule said.

Polestar is majority owned by Geely, a Chinese automaker, and its chairman Li Shufu. Geely also owns Volvo, which was granted a waiver in May.

None of Polestar’s vehicles sold in the United States are built in China. The Polestar 3 is built in a Volvo plant in Charleston, South Carolina, while the Polestar 4 is built in South Korea.

Neither the Commerce Department nor Geely immediately responded to a request for comment.

While Russia has little in the way of auto exports, China has become the world’s largest manufacturer of automobiles and a major exporter of vehicles, especially electric vehicles. But Chinese manufacturers have essentially been shut out of the American market by high US tariff rates on Chinese imports.

Polestar said it will continue to sell the existing stock of its Polestar 3 and Polestar 4 models in the US and will continue to support customers, including providing access to its service network. But the company said it will focus on future sales growth in Europe instead, where it already had 80% of its sales.

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