Dealer Says Polestar Engineered US Sales Ban In $25-Million Lawsuit

THE BREAKDOWN

• Prestige Imports of East Hanover sued Polestar in New Jersey state court, seeking at least $25 million in damages.
• Polestar confirmed US new-vehicle sales will stop after 2026 following Commerce Department denial under the Connected Vehicle Rule.
• Prestige alleges Polestar used the Connected Vehicle Rule ban to escape franchise obligations.

A New Jersey Polestar retailer is accusing the brand of helping engineer its own federal sales ban, turning a regulatory hammer into the centerpiece of a $25 million franchise lawsuit. The dealer argues the Connected Vehicle Rule decision is less an unlucky break and more a convenient exit ramp from the United States.

The case raises fresh questions about what Polestar's US sales halt really means for dealers trying to recover sunk investments and for buyers wondering how solid the brand's American footprint looks past the 2026 model year.

Dead EVs 2026: Polestar 2

Photo by: Polestar

Polestar Lawsuit Over The US Ban

The suit comes from Prestige Imports of East Hanover, which runs two New Jersey outlets under the Polestar banner and has filed in state court seeking at least $25 million in damages. The complaint claims Polestar was planning a US exit for roughly two years while still urging dealers to expand, including a multiyear Bergen County project allegedly approved as recently as February 2026 and tied to the planned 2028 launch of the Polestar 7.

Prestige alleges Polestar "maneuvered the government into a ban" under the federal Connected Vehicle Rule, which targets vehicles with data or tech ties to China and Russia. The dealer says what looks like a forced regulatory retreat was really a way to escape long-term franchise obligations and walk away from American showrooms with limited payout exposure. The complaint points to Geely stablemate Volvo, which obtained Commerce Department authorization to keep selling under the same rule, while claiming Polestar declined to seek comparable authorization and chose not to appeal.

The filing leans on franchise-law arguments, accusing Polestar of violating New Jersey's Franchise Practices Act by using the federal decision as cover for a constructive termination. It seeks payment of the franchises' fair market value plus several years of continued parts and warranty support, and cites Ohio Sen. Bernie Moreno's statement that Polestar was losing roughly $30,000 to $35,000 on every vehicle it sold in the United States as the claimed financial motive for treating the ban as a convenient way out.

What The US Ban Actually Does For Buyers And Dealers

Separate from the lawsuit, Polestar has confirmed that new-vehicle sales in the United States will stop with the 2026 model year after the Commerce Department denied its request for authorization under the Connected Vehicle Rule. Dealers can keep selling remaining inventory, and the company has pledged to continue backing existing owners with service and warranty coverage.

If you are trying to understand the regulatory side, earlier coverage of why Polestar will not fight the US Connected Vehicle Rule ban walks through the decision not to challenge the Commerce Department's move. For current owners and anyone eyeing a car already on the ground, there is also detailed guidance on what the US Polestar sales ban means for owners and warranties based on what the brand has publicly committed to so far.

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Motor1's Take: The lawsuit turns a regulatory ruling into a test of motive and franchise law, and the outcome could shape how automakers handle future market exits and what remedies dealers can expect when regulatory risk collides with sales plans. Discovery will matter as internal emails and board notes surface, and owners and prospective buyers will be watching to see whether the case affects long-term support and resale confidence.

More From Polestar:

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