Regulatory Action and Ownership Nexus
The U.S. Commerce Department’s Bureau of Industry and Security has refused to grant Polestar authorization to sell its vehicles in the American market, starting with the 2027 model year. This decision stems from the Connected Vehicle Rule, finalized in January 2025, which restricts importation and sale of vehicles with connected technology linked to China or Russia. Polestar is majority owned by China’s Geely Holding Co., triggering the rule despite the Polestar 3 being built in South Carolina and the Polestar 4 in South Korea, neither of which are assembled in China.
The rule covers telematics, cameras, microphones, GPS, Bluetooth, cellular modules, and automated driving software across all vehicle types. Software prohibitions take effect for model year 2027, with hardware restrictions following in 2030. This effectively ends new car sales in the U.S. for the Swedish electric vehicle brand, as its ownership structure creates a sufficient nexus to China under the regulation.
Impact on Automotive Supply Chain and OEM Strategy
Volvo Cars, also owned by Geely, received authorization to continue U.S. sales, reflecting its status as a separately listed automaker with a larger American footprint and less direct entanglement with Geely’s corporate structure. The disparate treatment between Volvo and Polestar signals a clear precedent: any automaker with Chinese capital upstream, regardless of where vehicles are actually manufactured, faces potential exclusion from the U.S. market under this rule.
Polestar CEO Michael Lohscheller announced a strategic pivot toward Europe, which represents nearly 80% of the brand’s retail volumes. The company also plans to target growth markets in Southeast Asia, Eastern Europe, Latin America, and Canada. This case demonstrates that connected vehicle regulations can effectively wall off brands based on ownership rather than manufacturing location, directly impacting OEM supply chain strategies, global market access planning, and the viability of cross border connected vehicle technology deployments.
Source: Axios
