Polestar dealer sues for $25M, alleges automaker orchestrated U.S. ban as cover for exit

Connected Vehicles rule denial pushed Polestar out of U.S. market

Prestige Imports, doing business as Prestige Polestar and owned by New Jersey dealer Matthew Haiken, filed the lawsuit Wednesday in New Jersey state court. The complaint alleges Polestar’s decision to exit the U.S. effectively and wrongfully terminates the dealership’s state franchise agreement and seeks at least $25 million in damages.

The Chinese-owned automaker “orchestrated” its recent ban by the U.S. government as “cover” for its desire to leave the American market, according to the lawsuit. The complaint contends Polestar ensured its own regulatory defeat by refusing to make changes U.S. authorities sought and by declining to appeal the Commerce Department’s denial of a waiver.

“Polestar refused to engage with regulators as Volvo did, and has refused to appeal the (government) decision,” the lawsuit said.

Polestar announced in June that it would stop selling new vehicles in the U.S. starting with the 2027 model year after the Commerce Department denied the company’s request for a waiver from a new “Connected Vehicles” rule. The rule, which U.S. authorities are now enforcing, is aimed at preventing foreign adversaries such as China and Russia from using vehicle technology — data transmission, cameras and other systems — to spy on Americans.

About a month before Polestar’s exit announcement, the Commerce Department approved a waiver for Volvo Cars, which shares common Chinese ownership and other links with Polestar, allowing Volvo to continue selling vehicles in the U.S. Both the Commerce Department and Polestar have declined to detail the factors in the Polestar decision. Haiken previously told The Wall Street Journal he found it baffling that Volvo was able to secure approval while Polestar was not.

Polestar has declined to comment on the litigation. “Our focus remains on serving our customers and ensuring they continue to receive the support and service they expect from us,” a Polestar spokesman said. The company has previously said it had “significant dialogue” with U.S. authorities about the waiver application and that it plans to “focus our investments on markets where we have a strong brand position and ability to achieve profitable growth, with a strong weighting towards Europe.”

The complaint notes that Polestar characterized the ban as a “Force Majeure” event outside of its control in a July 10 letter to Haiken, according to a copy of the letter filed with the lawsuit. The complaint portrays Polestar as having ensured its own denial through its regulatory posture, while Polestar’s July 10 letter characterized the ban as a Force Majeure event outside the company’s control.

Haiken, who declined to comment for this article, previously told the Journal he had invested millions of dollars to build a standalone Polestar showroom in New Jersey and halted construction when Polestar announced its exit. A small number of Volvo dealers, Haiken among them, were awarded Polestar franchises when the automaker began selling its Polestar 2 in the U.S. in 2020.

Polestar remains a niche player in the U.S. electric-vehicle market. The company sold 2,221 vehicles from January to July 2026, according to Motor Intelligence data, giving it less than 1% of the U.S. EV market over that period. The automaker is now selling off its stock of Polestar 3 SUVs and Polestar 4 coupes, including offering up to $25,000 in discounts on the vehicles.