Polestar has been banned from selling cars in the USA after the 2027 model year due to the country's new 'Connected Vehicle Rule'.
The new rules in the US crack down on cars with technology sourced from China, including over-the-air connectivity features, with US regulators citing concerns around the amount of sensitive data being collected on its citizens.
It is part of a wider protectionist regulatory push in the US to effectively ban Chinese vehicles to protect its large domestic auto industry.
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Polestar fell afoul of the new rules despite the Polestar 3 being built inside the US and the Polestar 4 being built in South Korea.
Volvo, Polestar's sister brand under the same Geely ownership, was granted a specific exemption to the new rules.
Policies like the Connected Vehicle Rule can effectively ban individual models or entire brands from sale in the country, but high tariffs are also wreaking havoc on the financials of both the Hyundai Motor Group and the biggest Japanese brands, including Toyota, Nissan and Honda, which all have partial manufacturing footprints in the US and now need to scramble to localise more parts or models.
Polestar issued a statement confirming the US made up only a small portion (six per cent) of its current sales footprint, and that it would re-focus on the European market where it says nearly 80 per cent of its sales volumes are centred.
The brand also re-committed to Latin America and Canada as important markets in the future.
The company said it would sell the remainder of its Polestar 3 and Polestar 4 stock in the US and then wind up its sales operation, continuing to support existing owners through its service network.
Polestar noted it is still committed to its future product line-up, which includes the Europe-built Polestar 7 small SUV (expected to share its underpinnings with the Volvo EX30 and Zeekr X) as its next key volume seller.
It will also continue to roll-out the Polestar 5 grand tourer and launch a next-generation Polestar 2 in 2027.
The future of the Polestar 3 mid-sized performance SUV, which is currently built in the US, is up in the air. The version of the car sold in Australia is still built in China.
Polestar's share price has taken a battering thanks to a range of recent events, which has seen the company's once global aspirations shrink down to a strategic focus on just a few markets.
The brand has closed all of its retail stores in China, where much of its range is built, after selling only a handful of vehicles in 2025. Instead it has shifted to a by-order-only online approach.
Despite these developments, the brand reported its highest ever Q1 sales result earlier this year, off the back of stronger sales in Australia, Germany, Sweden, South Korea and the UK.