Electric vehicle maker Polestar announced Thursday that the Trump administration is requiring the company to halt sales of its vehicles in the United States starting with the 2027 model year, part of a broader effort by Washington to crack down on cars tied to China.
Shares of Polestar slid 7.2% during midafternoon trading Thursday following the announcement, according to a report from the Detroit News.
Why The Government Stepped In
The US Department of Commerce declined to give Polestar the green light to continue selling vehicles under what’s known as the Connected Vehicles Rule. The rule restricts the import and sale of cars equipped with connected vehicle technology tied to China, with the restrictions kicking in for the 2027 model year.
The technology covered under the rule includes Bluetooth, Wi-Fi, cellular connectivity, and certain satellite communication systems. The rationale for the restrictions is national security, fear that these vehicles might be able to collect sensitive information about American drivers.
This rule actually dates back to January 2025, when it was put in place under President Joe Biden. It has remained in effect under President Trump.
Part Of A Larger Push Against Chinese Made Vehicles
This move represents the latest in a series of steps the US has taken aimed at restricting cars manufactured in and exported from China, as the country works to bolster its own domestic auto industry. Lawmakers have also floated legislation that would tighten these restrictions even further, and Chinese made EVs already face steep tariffs when imported into the country.
What This Means For Polestar Owners
Polestar, which is based in Sweden but majority owned by China’s Geely Holding, said it will keep selling its existing Polestar 3 and Polestar 4 models in the US for now and will continue offering access to its service network for current owners.
This isn’t a surprise to the company. Polestar had warned as far back as 2024 that these connected vehicle rules would essentially block it from selling cars in the US, even vehicles built domestically.
Looking Toward Europe Instead
Polestar CEO Michael Lohscheller addressed the shift in strategy, saying the auto industry is moving into a new era shaped by regional dynamics. He pointed to Europe as the company’s biggest growth opportunity going forward, adding that Polestar plans to manufacture its upcoming Polestar 7 model there.