Polestar Banned from U.S. Market for 2027 Models; Shifting to Europe with 94% Q1 Sales
PSNY•Geely-owned Polestar lost U.S. authorization to sell 2027 model-year cars under rules banning Chinese software and hardware. It will liquidate Polestar 3 and 4 stock, wind down U.S. operations and refocus on Europe, which drove 94% of Q1 retail volume as it posted a $383 million net loss.
1. Ban Details
The U.S. Department of Commerce declined to authorize Polestar under the Connected Vehicle Rule, which prohibits vehicles with Chinese-origin software or hardware in the American market starting with the 2027 model year. Polestar, owned by Geely, faces a full sales ban on new 2027 cars, while Volvo Cars, also owned by Geely, obtained separate approval after engagement with regulators on governance and data security.
2. U.S. Exit Plan
Polestar will sell off its remaining Polestar 3 and Polestar 4 inventory before winding down U.S. sales and marketing operations. Current owners and lessees will retain full service access and warranty coverage as the company ceases new vehicle deliveries.
3. Shift to Europe
Polestar is redirecting its commercial focus to Europe, which accounted for 94% of its retail sales volume in Q1 2026. The company plans to strengthen its dealer network and marketing efforts across key European markets to offset lost U.S. revenue.
4. Financial Performance
In Q1 2026, Polestar reported a net loss of $383 million, more than double the $166 million loss from a year earlier, as tariffs and pricing pressure eroded margins. Its gross margin swung to negative 3.2% from positive 10.3% in Q1 2025, highlighting the financial strain ahead of the U.S. exit.
