Polestar ceases US sales after 2027
Polestar has decided not to challenge the ban on selling new cars in the US, which takes effect after the 2027 model year. Instead, the manufacturer will focus on markets where its models have higher demand. This decision will negatively impact the 32 Polestar dealerships operating in the country.
Last month, the US Department of Commerce’s Bureau of Industry and Security announced that it would not allow Polestar to sell new cars after 2027 due to the company’s Chinese ownership and technology.
Polestar could have challenged this decision or sought an exemption similar to the one obtained by Volvo. However, the company stated that it would not do so.
We will focus our investments on markets where we have a strong brand position and the ability to achieve profitable growth, with a particular emphasis on Europe, — said Polestar representative Michael Ofiara.
Low sales and consequences for dealers
Last year, Polestar sold only 5,747 cars in the US, accounting for just 6% of the company’s global sales. Even if the ban had not been imposed, the brand would likely have eventually left the US market due to low performance.
Dealerships found themselves in a difficult situation. Many of them, which often also sell Volvo models, invested millions of dollars in building infrastructure for Polestar, hoping for future sales growth.
One dealership owner, Matthew Heiken, said he invested “millions” in a new Polestar showroom in East Hanover, New Jersey, but halted construction after the ban was announced. Upon learning that Polestar would not challenge the decision, he called it “very frustrating.”
It is not yet clear how the company plans to compensate dealers for their losses. According to New York attorney Russell McRory, state laws often require manufacturers to compensate dealers when exiting the market. Polestar says it will work with dealers but provides no specific details.
Discounts on Polestar 3 and Polestar 4
As the company prepares to exit the market, it aims to sell off existing inventory. Earlier this month, Polestar offered significant discounts on the Polestar 3 and Polestar 4 models — up to $25,000. However, buying a car from a brand leaving the country carries certain risks.
On the positive side, Polestar is not ceasing to exist. The company will continue operations in other markets, and service centers in the US will remain open to support already sold vehicles.
We will continue to sell our existing inventory of cars in the US, and our dealers will continue to support customers through sales, service, and after-sales support, — said a company representative.
Polestar’s decision not to fight for the US market seems quite rational given its meager sales. The company has apparently chosen not to waste resources on lengthy legal battles, instead focusing on Europe, where its position is significantly stronger. For US dealers, this is undoubtedly a serious blow, especially considering their significant investments in infrastructure. However, the fact that Polestar continues to exist on a global level and promises to support already sold vehicles somewhat alleviates the situation for owners. Whether the company will be able to offer adequate compensation to dealers remains an open question, and this could become the subject of separate legal proceedings.