US Department of Commerce denies Polestar authorisation under Connected Vehicle Rule, threatening US sales from 2027
The US Department of Commerce has denied Polestar authorisation to sell vehicles in the US from 2027 under the Connected Vehicle Rule, which is designed to target the import and sale of vehicles featuring technology linked to China or Russia. As a result, Polestar has announced it will increase its focus on the European market.
Polestar will not be authorised to sell vehicles in the US from model year 2027 under the Connected Vehicles Rule
Polestar
The Connected Vehicle Rule, finalised by the US Department of Commerce’s Bureau of Industry and Security (BIS) in January 2025, aimed to address concerns that internet-connected cars could collect sensitive data and potentially be remotely accessed through technologies such as cellular modules, Wi-Fi, Bluetooth, cameras, sensors and automated driving software.
It applies to any automaker that is owned, controlled by, or subject to the direction of entities from China or Russia. Each of these companies is required to obtain authorisation from the Department of Commerce to continue selling connected vehicles in the US, with investigations conducted on a case-by-case basis.
The BIS recently refused to grant Polestar authorisation to sell vehicles in the US from model year 2027 onwards. As a result, Polestar is expected to be unable to sell new vehicles in the US from this date under the current regulatory framework.
The company has said it will continue to sell existing inventory and support existing customers, although the longer-term future of its US operations remains unclear.
Polestar's response
Following the BIS' decision, Polestar issued a statement saying that the company intends to increase its strategic focus on Europe by continuing to expand its sales network and preparing to localise the manufacturing of future models.
Polestar noted that just 6% of its retail sales volumes in the first quarter of 2026 originated from the US market, while Europe represents almost 80% of the company’s retail sales volumes.
“The automotive industry is entering a new phase, based on regional dynamics," Polestar CEO Michael Lohscheller commented. "Our strategy reflects that, with Europe being our largest growth engine and our plan to manufacture Polestar 7 in Europe."
As Lohscheller alluded to, the Polestar 7 – a premium compact SUV – will be produced in Kosice, Slovakia, when it launches in 2028. Polestar confirmed this new model will be manufactured at Volvo Cars' Kosice factory, which is currently under construction.
Lohscheller also noted that Polestar will continue to invest in markets where it believes there are growth opportunities, including Southeast Asia, Eastern Europe, Latin America and Canada.
Uncertainty around production in Charleston
Polestar is primarily owned and controlled by China-based Geely Holding Group but is part-owned by Volvo Cars and as such many Polestar models are produced in Volvo Cars factories around the world, including the aforementioned Polestar 7 in Slovakia.
The Polestar 3 is currently produced at Volvo Cars' Charleston plant in South Carolina, USA. At time of writing, there has been no official communication from either Polestar or Volvo Cars regarding the future of Polestar-dedicated production capacity at the Charleston plant.
However, a spokesperson for Volvo Cars told Reuters on June 25 that it was "too early" to say how the BIS' decision might affect plans to consolidate production of the Polestar 3 in South Carolina rather than also producing units in China – a decision it confirmed in March this year.
Volvo Cars granted the authorisation that Polestar was not
Unlike Polestar, Volvo Cars confirmed on May 26, 2026, that it had been granted a specific authorisation from the Office of Information and Communications Technology and Services under the “Securing the Information and Communications Technology and Services Supply Chain: Connected Vehicles” rule in the United States.
With this authorisation, the company said it will continue its growth plans in the US – which it identified as "one of the largest markets for Volvo Cars".
