Polestar, the Swedish EV brand owned by Chinese automaker Geely, announced Thursday that the U.S. Department of Commerce declined to grant it authorization under the Connected Vehicle Rule, effectively barring the company from marketing or selling new model-year 2027 vehicles in the United States.

The company said it will continue to sell existing stock of the Polestar 3 and Polestar 4 in the U.S.

In its official statement, Polestar said it "will continue to support customers, including providing access to its service network."

Polestar's Response: A Strategic Pivot

Polestar is characterizing its U.S. exit not as a forced retreat but as an acceleration of a strategy already largely centered on Europe.

Said CEO Michael Lohscheller in the statement: "The automotive industry is entering a new phase, based on regional dynamics. Our strategy reflects that, with Europe being our largest growth engine and our plan to manufacture Polestar 7 in Europe. Our record sales in 2025 and the first quarter of 2026 show that we are making strong progress, with several new market launches taking place in Europe this year. In addition, we will continue to invest in markets where we have opportunities to continue to grow, like Southeast Asia, Eastern Europe, Latin America and Canada."

Lohscheller also pointed to a full product pipeline as evidence of the company's broader health: "Polestar continues to challenge bigger, more established players thanks to our impressive cars and growing model line-up. Polestar 5 has received incredible feedback from the global media, with customer deliveries set to start during the summer. A new variant of our global bestseller, Polestar 4, is planned for the second half of this year, followed by the all-new Polestar 2 in 2027, and thereafter the Polestar 7 compact SUV."

None of those models, under the current rule, will be available to U.S. fleet buyers.

What Is the Connected Vehicle Rule?

The Connected Vehicle Rule, finalized in January 2025, bans connected vehicles with a "sufficient nexus" to China or Russia from the U.S. market, with software prohibitions taking effect for model year 2027 and hardware restrictions following in 2030. It covers telematics, cameras, microphones, GPS, Bluetooth, cellular modules, and automated driving software across gas, hybrid, and electric vehicles alike.

The argument is that Chinese-linked vehicle technology — including automated driving and connectivity systems — poses a national security risk.

The rule also covers American-made models that use Chinese software, meaning factory location alone is not sufficient to secure authorization. That's a relevant consideration for fleet procurement teams evaluating vehicles from brands with complex global ownership structures.

The Polestar 3 is built at Volvo's plant in Charleston, South Carolina, while the Polestar 4 is assembled in Busan, South Korea. Neither fact was sufficient to secure the company's authorization.

Volvo Cars Granted Authorization

The Polestar decision comes just a few months after the Trump administration granted the same authorization to Volvo Cars — Polestar's sibling company. Both automakers are publicly traded and operate under Geely's control, although Volvo Cars remains a separate listed company while Polestar is majority controlled by Geely-affiliated entities.

Volvo Cars operates as a more established automaker with a larger U.S. footprint, while Polestar is more closely tied to Geely's broader corporate structure and shares vehicle platforms and software with other Geely brands.

The Commerce Department has not publicly detailed the specific criteria that differentiated the two outcomes.

Volvo announced the exemption in a press statement on May 26:

"Under the rule Volvo Car USA was required to follow a process with the US Department of Commerce to obtain a specific authorization for the continued import and sale of connected cars in the US. The process is carried out on a case-by-case basis and the issuance of a specific authorization follows constructive discussions with the US Department of Commerce and other US officials regarding Volvo Cars' governance, technology and data security."

"With this specific authorization, Volvo Cars can continue its growth plans in the US."