On June 25, 2026, Polestar confirmed that the US Department of Commerce's Bureau of Industry and Security had refused the company permission to sell vehicles in the United States starting with the 2027 model year. This decision means Polestar will exit the US market entirely after less than a decade of operations. The brand will continue selling its existing inventory of the Polestar 3 SUV and Polestar 4 crossover while stocks last, and will maintain its service network for current owners.

The Connected Vehicle Rule was introduced in January 2025 in the final days of the Biden administration and remained in force under the Trump administration without modification. The regulation treats modern connected vehicles as what the Bureau of Industry and Security calls mobile data centers. The rule restricts the sale of any connected vehicle whose software, or potentially hardware, is linked to an entity owned, controlled, or subject to the jurisdiction of China or Russia.

The detail that generated the most confusion and criticism is that Volvo, owned by exactly the same Chinese parent company as Polestar, received an exemption under the same rule. Volvo reportedly held « constructive discussions » with the Department of Commerce covering its governance, technology, and data security practices.

Polestar, despite manufacturing its Polestar 3 SUV in a Charleston, South Carolina facility shared with Volvo, did not receive the same treatment. What is known is that the Department of Commerce evaluates these exemptions on a case-by-case basis of governance and technology, not a blanket brand-level decision.

The Connected Vehicle Rule is officially justified by national security concerns. Modern vehicles collect data about roads, routes, driving habits, and locations. If a hostile power controls the software or hardware managing this data, it could potentially access sensitive information about US infrastructure, military movements, or critical civilian data.

However, the rule also functions as a protectionist tool. It keeps Chinese automakers out of the US market, one of the world's most lucrative. For American and allied European automakers, it's protection against rising Chinese competition.