WASHINGTON, June 25, 2026, 13:04 EDT
- Polestar can’t sell its 2027 models in the U.S. after regulators refused authorization under the Connected Vehicle Rule.
- The U.S. accounted for 6% of Polestar’s Q1 sales, so about 790 out of 13,126 vehicles went to U.S. buyers.
- Polestar reported Europe made up almost 80% of its retail sales, while 94% of Q1 volume was outside the U.S.
- The ban has less impact on today’s unit count, but it does affect U.S. upside, South Carolina output, and funding risk.
Polestar Automotive Holding UK PLC (NASDAQ:PSNY) is set to halt new U.S. sales from model year 2027. The U.S. Commerce Department’s Bureau of Industry and Security turned down Polestar’s request for authorization under new connected-vehicle rules targeting China-linked tech. The Swedish EV company said it will continue to offer current Polestar 3 and Polestar 4 inventory in the U.S., and customers can still access service.
Size is the key issue for investors. Reuters put U.S. sales at just 6% of Polestar’s first-quarter total, with Europe at 78%. Out of 13,126 units sold retail, about 790 went to the U.S., roughly 10,200 to Europe. The ban targets a future market, not where Polestar sells most cars now.
Polestar needs to avoid weak product mix and keep launch momentum. First-quarter revenue stayed close to flat at $633 million. Gross margin dropped to negative 3.2%, down from 10.3% a year ago, and net loss widened to $383 million. Cash ended the quarter at $676 million, down from $1.16 billion at the end of 2025.
Polestar CEO Michael Lohscheller said the automotive sector is moving into a new phase shaped by regional trends. Lohscheller said the company will put money into “Southeast Asia, Eastern Europe, Latin America and Canada,” and called Europe its growth hub. Polestar
Polestar said nearly 80% of its retail sales are in Europe. The carmaker is targeting late 2026 for a new Polestar 4 variant. A successor to the Polestar 2 is expected in early 2027, with Polestar 7 set for 2028 and the Polestar 6 roadster to follow. Polestar plans to build the Polestar 7 in Europe.
The U.S. move slices into Polestar’s manufacturing setup. Back in March, Polestar said Volvo Cars (STO:VOLCAR-B) would turn roughly $274 million in shareholder loans into equity, and both firms planned to bring future Polestar 3 production to Charleston, South Carolina.
Volvo said Thursday it’s too soon to tell if the U.S. move will change its plans, Reuters reported. The company also said it hasn’t stopped production in China. That means the Polestar 3, which is Polestar’s only model built in the U.S., is still linked to a market where Polestar may not be able to sell new model-year 2027 vehicles.
Ownership is the crux of the rule. BIS says that starting with model year 2027, carmakers owned or controlled by China or Russia, or under their direction or jurisdiction, can’t sell connected vehicles in the U.S. if they use covered software. A hardware import ban kicks in for model year 2030, or Jan. 1, 2029 for non-model-year parts.
Volvo Cars, which is mostly owned by China’s Zhejiang Geely Holding Group, got U.S. approval in May to keep selling its connected cars. “With this specific authorization, Volvo Cars can continue its growth plans in the United States,” the company said back then. Polestar didn’t get that approval. Reuters
Polestar shares dropped 5.7% in the morning, Reuters said. The stock has already been struggling after losses, more debt, and last year’s reverse split to maintain its Nasdaq spot.
Polestar’s 2025 numbers point investors to cash. The EV maker sold 60,119 cars last year, up 34%. Revenue hit $3.06 billion, a 50.3% increase. Still, net loss got worse, reaching $2.36 billion while cost of sales was $4.14 billion.
Equity and debt holders are left wondering if Europe will absorb enough volume at stronger pricing, as tariffs, new models and working-capital demands keep squeezing cash.
