Polestar’s withdrawal from the US car market has turned into a courtroom fight with one of its own retailers. Prestige Imports, based in East Hanover, New Jersey, has sued the Swedish brand for at least $25m, arguing that it engineered its exit and left dealers with investments they can no longer recover.
On 25 June Polestar said the US Commerce Department had denied it authorisation under the Connected Vehicle Rule, which targets cars with Chinese- or Russian-linked technology, to sell 2027-model-year vehicles and later. Polestar is majority-owned by China’s Geely. It said it would sell remaining stock and keep servicing existing cars.
The dealer’s case
The complaint, filed in New Jersey state court and reported by CBT News on 13 August, alleges that Polestar had prepared to leave the US for roughly two years and “maneuvered the government into a ban”. It says Polestar did not pursue the kind of authorisation that sister brand Volvo obtained, and chose not to appeal the refusal.
Prestige points to a multi-year expansion in Bergen County, tied to the Polestar 7 planned for 2028, which a Polestar executive allegedly approved as recently as February 2026. It argues that ending the franchise without 60 days’ notice or good cause amounts to constructive termination under New Jersey’s franchise law, and wants the franchise’s fair market value plus five years of parts and warranty support.
Polestar’s position
In early July Polestar sent the dealer a force majeure letter arguing that the government restriction was outside its control, according to Carscoops. It declined to comment on the lawsuit. Republican senator Bernie Moreno, a former car dealer, has said Polestar rather than the government was to blame, and claimed it lost $30,000 to $35,000 on each car sold in the US. That figure has not been confirmed by Polestar.
A national-security rule written in Washington is now being tested as a commercial excuse in a state franchise court.
The allegations have not been proven in court.
What to watch
- Polestar’s formal response and whether other US retailers file similar claims.
- How the court treats force majeure when a company did not appeal the government decision.
