The United States government is tightening regulations on Chinese companies, escalating trade tensions between the two nations. The latest company impacted by these measures is the electric vehicle (EV) manufacturer Polestar, which operates under the Chinese automotive group Geely.

According to the automotive news outlet Carscoops, the U.S. Department of Commerce, through its Bureau of Industry and Security, intends to prohibit the brand from selling new models within the country starting in 2027. This development follows Polestar’s strategic decision in 2024 to shift production of the Polestar 3 model to South Carolina in an effort to bypass import tariffs imposed on Chinese-manufactured EVs.

The agency’s decision is rooted in the “Connected Vehicle Rule.” This regulation bans the sale of vehicles utilizing software or hardware originated from China or Russia, citing national security concerns regarding data and connectivity.

To operate within the U.S. market under these guidelines, automotive manufacturers must secure explicit sales authorization from the American government. To date, Polestar has not successfully obtained this clearance. The regulatory timeline dictates that the ban on software from these nations will take effect in 2027, followed by the hardware restrictions in 2030.

The enforcement of this policy has raised questions regarding the specific evaluation criteria used by U.S. authorities. While Volvo is also controlled by Geely, it has successfully secured the necessary authorization to continue its sales operations in the United States, contrasting sharply with Polestar’s situation.

Given that Polestar has already established local production infrastructure in the U.S., it remains uncertain whether the company will relocate its manufacturing bases or modify its supply chain to comply with the new regulatory framework. Consequently, the market outlook for the Sweden-founded brand in the United States remains highly unstable.

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