US Restricts Sales of Polestar EVs Amid Escalating China Trade Tensions

The U.S. Commerce Department has blocked Polestar’s application to sell electric vehicles in the country starting with the 2027 model year, citing national security concerns tied to the automaker’s Chinese ownership, according to official documents reviewed by Reuters. The decision marks a significant escalation in U.S. efforts to limit Chinese influence in the global automotive sector.

What Triggered the Restriction?

The ban stems from the Commerce Department’s review of Polestar’s ties to Geely, the Chinese automaker that owns a 50% stake in the Swedish brand. A 2023 federal rule requires companies with foreign “critical technology” investments to undergo stringent scrutiny for U.S. market access. Polestar’s application for 2027 model year compliance was denied in late 2024, according to a filing with the Department of Transportation.

How Does This Affect Polestar’s U.S. Operations?

Polestar currently sells around 15,000 vehicles annually in the U.S., according to Polestar’s 2023 financial report. The ban would prevent the company from launching new models after 2026, though existing inventory could still be sold. The automaker has not yet commented publicly on the decision, but a spokesperson told CNN that it “remains committed to the U.S. market and is exploring all legal avenues.”

What’s the Broader Context of U.S.-China Tech Tensions?

This move aligns with broader U.S. efforts to restrict Chinese technology firms, including Huawei and DJI, under the 2021 China Technology Competition Act. The Commerce Department’s actions follow a 2024 report warning that Chinese EV subsidies threaten U.S. manufacturing. Analysts note that Polestar’s hybrid ownership structure—Volvo holds the other 50%—complicates the regulatory review.

How Did Other Outlets Cover This Story?

While Irish Independent and Autocar reported the ban as an outright prohibition, Ars Technica clarified that the denial applies specifically to 2027 model year compliance, not existing sales. CNN highlighted the potential ripple effects on U.S. EV supply chains, noting that Polestar’s U.S. operations rely on components sourced from both Europe and China.

What’s Next for Polestar?

The automaker could appeal the decision through the Department of Transportation’s formal review process, which typically takes 60–90 days. Meanwhile, Polestar has begun exploring alternative markets, with official statements emphasizing growth in Europe and Asia. The outcome could set a precedent for other automakers with mixed ownership structures, including Rivian, which has Chinese investment through its battery partner, Contemporary Amperex Technology Co. Limited (CATL).