NJ Dealer Alleges Polestar Orchestrated US Exit Under Regulatory Pretext
A recent lawsuit brought forth by a New Jersey Polestar dealership alleges that the electric vehicle manufacturer had been strategically planning its withdrawal from the American market for two years, merely using the government's Connected Vehicle Rule as a convenient public rationale. This accusation arises amidst Polestar's official announcement regarding its departure from the U.S. due to restrictions on vehicles with software linked to countries like China and Russia. The credibility of Polestar's stated reason is questioned, particularly given that Volvo, a fellow brand under Geely's ownership, successfully secured a special authorization from the Department of Commerce, allowing it to continue selling connected cars in the United States.
New Jersey Dealership Challenges Polestar's Official Stance
In a significant legal development, New Jersey-based Prestige Imports has filed a lawsuit against Polestar, contending that the company's exit from the U.S. market was a premeditated decision rather than a forced consequence of the Connected Vehicle Rule. This legal action, brought to light by Automotive News, cites a violation of New Jersey's Franchise Practices Act. The dealership asserts that Polestar failed to provide the mandatory 60-day notification or demonstrate 'good cause' for terminating its franchise agreements, as stipulated by the act. The core of Prestige Imports' claim is that Polestar deliberately chose not to comply with the necessary requirements to remain in the U.S., unlike Volvo, which diligently navigated the regulatory complexities. Industry figures and political voices echo this sentiment. Bernie Moreno, a Republican Senator from Ohio, notably remarked in July, “Polestar screwed Polestar, it wasn't screwed by the U.S. government,” emphasizing that Polestar intentionally avoided the rigorous compliance steps taken by Volvo. Moreno suggested that Polestar's substantial financial losses, reportedly up to $35,000 per vehicle in the U.S., motivated an orchestrated exit, disguised by the regulatory ban. Further corroborating this narrative, Benjamin Dousa, Sweden's Minister for Foreign Trade, confirmed his close collaboration with Volvo to ensure its compliance, noting that Polestar never sought similar assistance. Adding to the controversy, Polestar reportedly made no appeal against the U.S. government's ruling, further fueling suspicions that the company was aware of its inability or unwillingness to meet the necessary conditions. Compounding the issue for its dealers, the lawsuit also alleges that Polestar continuously pressured them to invest and, as recently as February 2026, even agreed to multi-year expansion plans, all while privately knowing of its impending departure from the country.
This ongoing legal battle between Prestige Imports and Polestar sheds light on the intricacies and potential pitfalls within the automotive industry's distribution networks, especially in the rapidly evolving EV market. The situation raises critical questions about corporate transparency, ethical responsibilities towards business partners, and the interpretation of regulatory challenges. For dealerships, the potential implications of such corporate decisions are profound, impacting their investments, workforce, and long-term business viability. This case could set a precedent for how automotive manufacturers communicate and manage their market strategies, particularly when faced with significant regulatory shifts or financial pressures.