Did Polestar Get Banned From America, or Did It Just Find a Really Convenient Way Out?
A New Jersey retailer suing Polestar for $25 million says the Swedish EV maker didn't get pushed out of the U.S. market by regulations—it engineered its own exit.
When the Commerce Department denied Polestar authorization to sell 2027 and newer model-year vehicles under the federal Connected Vehicle Rule back in late June, the official story was clean, dramatic, and convenient. Government red tape had claimed another victim, forcing the Swedish-born, Geely-backed EV brand to gracefully pack up its sleek minimalist pop-up shops, pivot to Europe, and leave American buyers staring into an uncertain void of residual value.
Except according to a massive $25 million lawsuit filed in federal court by New Jersey retail group Prestige Imports, that whole story is complete bunk.
In a complaint that should make every franchise attorney in Detroit spill their lukewarm espresso, Prestige Imports alleges that Polestar did not get tragically forced out of the American market by overzealous regulators. Instead, the suit claims Polestar spent the last two years actively maneuvering itself into a corner, deliberately failing to secure the regulatory waivers that corporate sibling Volvo managed to obtain, and then using the resulting prohibition as a get-out-of-jail-free card to ditch its U.S. dealer network without paying standard franchise termination costs.
If that sounds cynical, wait until you look at the timeline.
According to court filings, Polestar executives were encouraging American dealers to pour fresh capital into retail expansions as recently as February 2026. Retailers were told that brand-building was on track, the upcoming Polestar 7 was being tailored specifically around U.S. consumer taste, and bright multi-year projections were guaranteed. Prestige Imports claims it signed off on expensive multi-year real estate expansions in Bergen County on the direct promise of future product pipeline.
Then, just months later, Polestar received its denial from federal regulators regarding connected vehicle software rules, shrugged its shoulders, declined to appeal the decision, sent out force majeure letters to its store operators, and pointed toward the door.
That is where former auto dealer turned U.S. Senator Bernie Moreno entered the chat with zero desire to play polite. Commenting on the situation recently, Moreno didn't mince words, noting plainly that Polestar was not screwed by the U.S. government, but rather screwed by Polestar. Moreno pointed out that Volvo faced the exact same regulatory gauntlet and managed to jump through the necessary hoops to stay compliant. Polestar, meanwhile, was reportedly hemorrhaging upwards of $30,000 to $35,000 on every single vehicle it handed over to an American customer.
When you are losing five figures per delivery in a market that accounts for less than a fifth of your global volume, a federal regulatory wall suddenly looks less like a roadblock and more like a pre-built emergency ramp.
The legal fight now turns on New Jersey’s notoriously strict franchise laws. Generally speaking, state law requires automakers to establish good cause and provide proper 60-day notice before terminating a franchise relationship—good cause usually meaning the dealer fundamentally failed to hold up their end of the bargain, not that the manufacturer decided selling cars in North America was getting too expensive. By invoking force majeure, Polestar attempted to argue that an outside regulatory act made performance impossible. Prestige Imports argues that you cannot claim an act of God when you left the front door wide open for the tornado yourself.
Except according to a massive $25 million lawsuit filed in federal court by New Jersey retail group Prestige Imports, that whole story is complete bunk.
In a complaint that should make every franchise attorney in Detroit spill their lukewarm espresso, Prestige Imports alleges that Polestar did not get tragically forced out of the American market by overzealous regulators. Instead, the suit claims Polestar spent the last two years actively maneuvering itself into a corner, deliberately failing to secure the regulatory waivers that corporate sibling Volvo managed to obtain, and then using the resulting prohibition as a get-out-of-jail-free card to ditch its U.S. dealer network without paying standard franchise termination costs.
If that sounds cynical, wait until you look at the timeline.
According to court filings, Polestar executives were encouraging American dealers to pour fresh capital into retail expansions as recently as February 2026. Retailers were told that brand-building was on track, the upcoming Polestar 7 was being tailored specifically around U.S. consumer taste, and bright multi-year projections were guaranteed. Prestige Imports claims it signed off on expensive multi-year real estate expansions in Bergen County on the direct promise of future product pipeline.
Then, just months later, Polestar received its denial from federal regulators regarding connected vehicle software rules, shrugged its shoulders, declined to appeal the decision, sent out force majeure letters to its store operators, and pointed toward the door.
That is where former auto dealer turned U.S. Senator Bernie Moreno entered the chat with zero desire to play polite. Commenting on the situation recently, Moreno didn't mince words, noting plainly that Polestar was not screwed by the U.S. government, but rather screwed by Polestar. Moreno pointed out that Volvo faced the exact same regulatory gauntlet and managed to jump through the necessary hoops to stay compliant. Polestar, meanwhile, was reportedly hemorrhaging upwards of $30,000 to $35,000 on every single vehicle it handed over to an American customer.
When you are losing five figures per delivery in a market that accounts for less than a fifth of your global volume, a federal regulatory wall suddenly looks less like a roadblock and more like a pre-built emergency ramp.
The legal fight now turns on New Jersey’s notoriously strict franchise laws. Generally speaking, state law requires automakers to establish good cause and provide proper 60-day notice before terminating a franchise relationship—good cause usually meaning the dealer fundamentally failed to hold up their end of the bargain, not that the manufacturer decided selling cars in North America was getting too expensive. By invoking force majeure, Polestar attempted to argue that an outside regulatory act made performance impossible. Prestige Imports argues that you cannot claim an act of God when you left the front door wide open for the tornado yourself.
For current Polestar owners, the lawsuit only adds to a growing sense of heartburn. While the company insists it will maintain service support and parts availability for existing vehicles, orphaned EV brands rarely enjoy thriving secondary market valuations. If you are shopping around for a clean used electric sedan or crossover right now, knowing the real story behind market exits is critical. Tools like OptiCar Reports can give buyers and independent dealers a clear window into vehicle condition, market history, and fair pricing before signing a check on a model whose parent factory just pulled a vanishing act.
Whether Prestige Imports wins its $25 million payout remains up to the courts, but the broader lesson for the industry is already loud and clear. If an automaker tells you they are leaving the country because the government made them do it, you might want to check if they had a suitcase packed in the trunk all along.
Whether Prestige Imports wins its $25 million payout remains up to the courts, but the broader lesson for the industry is already loud and clear. If an automaker tells you they are leaving the country because the government made them do it, you might want to check if they had a suitcase packed in the trunk all along.
