Major car brand banned from selling vehicles in the United States over links to China

Popular electric car manufacturer Polestar has announced an overhaul of its sales strategy after being banned from selling its vehicles in the United States.

The Swedish company said the US Department of Commerce's Bureau of Industry and Security has not granted Polestar an authorisation to sell vehicles in the US from 2027 onwards.

It stated that this was under the Connected Vehicle Rule, severely impacting the brand's ability to sell in the major market.

The Swedish company said it would increase its strategic focus in Europe, which represents almost 80 per cent of its retail sales volumes, in response to the decision.

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In the first quarter of 2026, 94 per cent of Polestar's retail sales originated in markets outside the United States.

Polestar will continue to sell existing stock of its 3 and 4 models in the United States, in addition to supporting customers with access to its service network.

The rules from the US government have been introduced on national security grounds in a bid to curb the influence of Chinese brands.

While Polestar was founded in Gothenburg, Sweden, and retains its headquarters there, it is majority owned by Chinese companies PSD Investment and Geely Holding.

The measures introduced by the Connected Vehicle Security Act of 2026 prohibit the importation, manufacture, sale, resale, or introduction into interstate commerce of vehicles and software associated with "foreign adversaries".

The list of "foreign adversaries" includes North Korea, China, Russia and Iran, while the country of origin refers to where the item is manufactured and which government has jurisdiction over where the item is made.

Congress stated that China exports eight million vehicles annually, around twice the volume exported by any other country.

Commenting on the decision, Polestar CEO Michael Lohscheller said: "The automotive industry is entering a new phase, based on regional dynamics.

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"Our strategy reflects that, with Europe being our largest growth engine and our plan to manufacture Polestar 7 in Europe.

"Our record sales in 2025 and the first quarter of 2026 show that we are making strong progress, with several new market launches taking place in Europe this year.

"In addition, we will continue to invest in markets where we have opportunities to continue to grow, like Southeast Asia, Eastern Europe, Latin America and Canada."

Mr Lohscheller said Polestar was working to challenge "bigger, more established" players in the market as it prepares to launch its largest model offensive.

A second variant of the best-selling Polestar 4 is planned for the second half of the year, followed by the new Polestar 2 next year and the Polestar 7 compact SUV.

Polestar vehicles sold in the United States are produced outside of China, with the Polestar 3 being built in South Carolina, while the Polestar 4 is produced in South Korea.

The ban on connected devices includes microcomputers, Bluetooth, Wi-Fi, satellite communication systems and external antennas.

From January 2030, the US will introduce a further ban on the "importation, manufacture, sale, resale, or introduction" from certain countries.

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