Polestar faces $25 million lawsuit from U.S. dealers over market exit

Polestar dealers, led by Prestige Imports, have filed a $25 million lawsuit against the Swedish automaker, alleging the company intended to exit the U.S. market prior to new regulatory bans. The lawsuit claims Polestar used the regulatory environment as a pretext to avoid contractual obligations and failed to provide the required 60-day notice for terminating franchises.

The exit follows the U.S. Connected Vehicle Rule, a bipartisan national security measure that prohibits software used for communications and autonomous driving from being sourced from foreign adversaries, including China. While Polestar is a Swedish brand, it is majority-owned by the Chinese automotive giant Geely. Unlike Volvo, which received a waiver to continue sales, Polestar was denied an exception by the U.S. Department of Commerce.

As a result, U.S. dealers must sell through existing 2026 model stock before transitioning to service and support roles. Polestar is expected to shift its focus toward European markets, where the vast majority of its sales currently occur.