Polestar Still Has No Idea Why The U.S. Govt. Kicked It Out

• Polestar said the Department of Commerce has not yet explained its ban on selling cars in the U.S.
• It is arguing that Volvo was granted authorization to sell an EV with an identical software stack.
• The automaker has not appealed the Trump administration's decision.

Polestar has yet to get an explanation from the U.S. Department of Commerce for its decision to effectively force the automaker out of the American car market. The government denied the automaker, which is owned by China’s Geely Group, authorization to sell cars in the U.S. for model year 2027 onward. Its corporate cousin, Volvo, was granted a special authorization to continue selling its cars in the U.S.

In a letter sent to dealers and viewed by The Wall Street Journal (paywall), Polestar said it has yet to hear back from the Trump administration on why it must stop selling EVs in America. The automaker argued that its Polestar 3 electric SUV is mechanically identical to the Volvo EX90, and that both are assembled on the same production line at the Volvo Cars plant in Ridgeville, South Carolina.

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At the core of all this is the Connected Vehicle rule, which restricts vehicles linked to hardware or software from foreign adversaries such as China and Russia from being sold in the U.S. The rule was finalized by the Biden administration and argues that vehicles connected to Chinese technology, including telematics and advanced driver assistance systems, could pose a national security risk or potentially be used to spy on Americans. 

“In essence, we are currently focusing on getting the attention of (the Commerce Department) to obtain the requested information and to understand the underlying basis for the denial,” Peter Wexler, Polestar’s U.S. head of government affairs, said in the letter viewed by The WSJ. He added that the Volvo EX90 was “a car that is essentially the same as the Polestar 3 and that uses the same software stack.”

The saga took a bizarre twist earlier this month when a New Jersey Polestar dealer filed a lawsuit against the Swedish automaker, claiming that it was planning its U.S. exit for two years and used the government ruling as a cover up. The dealership, Prestige Imports, said Polestar violated New Jersey’s Franchise Practices Act, which generally prohibits automakers from terminating a franchise without at least 60 days advance written notice and good cause.

Sweden's Minister for Foreign Trade Benjamin Dousa said that he worked very closely with Volvo to make sure it met the Connected Vehicle Rule requirements to continue selling cars in the U.S., but Polestar didn't ask for the same help, per Automotive News.

All told, Polestar did not appeal the U.S. government’s ban and instead said it would double down on the European market, which accounts for 80% of its global sales.

That said, if you’re looking for a bargain EV, you may still want to consider a Polestar. The automaker is offering a whopping $25,000 discount on the Polestar 4 coupe and Polestar 3 SUV as it prepares to wind down its U.S. operations. It’s a rather unusual way to end a chapter in the American market. Sell the cars for less while waiting for the government to explain why you can’t sell them at all.

Contact the author: suvrat.kothari@insideevs.com

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