NJ dealer sues Polestar for $25 million, calls US exit a staged ban

A New Jersey dealer that sells Polestar cars sued the automaker for at least $25 million.

The dealer contends Polestar spent two years setting up its U.S. exit and used a federal ruling as an escape hatch. The claim comes as the brand is winding down sales in the U.S.

What Prestige Imports is claiming

Prestige Imports has a Polestar store at Short Hills, among other locations. It filed the complaint over the brand’s impending exit.

The complaint alleges that Polestar had been preparing for the retreat for years, that it refused the same federal authorization its sister brand received, and that it never challenged the denial when it came.

The dealer contends the departure breaches New Jersey’s Franchise Practices Act. That law generally prohibits a manufacturer from terminating a franchise without both a 60-day notice and “good cause,” which is tied to a dealer’s own failure to perform.

The suit says Polestar delivered neither. Prestige is asking for damages and the fair market value of the franchise, as well as parts and warranty support for five years. Polestar declined to comment on the matter.

Polestar and Volvo are both owned by Chinese automaker Geely. In June, Cryptopolitan reported that Volvo received a waiver from the Department of Commerce.

This waiver allows the company to continue selling connected cars in the US under the Connected Vehicle Rule. That rule bans vehicle software controlled by Chinese or Russian companies, starting with the 2027 model year.

Volvo explained its clearance as the result of “constructive discussions with the US Department of Commerce and other US officials” on its governance, technology, and data security.

Washington had left it no choice but to leave, Polestar said, and it did not have such clearance. Polestar 3 is built in a factory shared with Volvo, and the two brands feature near-identical infotainment.

The senator and the minister who backed the dealer

Ohio Republican and former car dealer Sen. Bernie Moreno said, “Polestar was screwed by Polestar. It wasn’t screwed by the U.S. government.”

Moreno said Volvo followed an “exhaustive and tough” list of requirements, while Polestar simply declined to do so. He also said the brand was losing $30,000 to $35,000 on every sale in the U.S.

Benjamin Dousa, Sweden’s foreign trade minister, said that he traveled to Washington with Volvo Cars CEO Hakan Samuelsson to help obtain that company’s license. “But Polestar has not asked for help,” Dousa said.

The complaint also cites that the Polestar CEO told retailers the brand was on track for its best year yet and designing the Polestar 7 for American buyers after the rule was finalized in early 2025.

The Polestar 7 is due to arrive in 2028, and a Polestar executive approved a multiyear Bergen County expansion as recently as February 2026.

The Department of Commerce denied Polestar authorization for 2027-model-year cars on June 25. The company’s stock, PSNY, fell more than 13% on that day.

Polestar said that support and warranties for existing owners and lease customers remain in place and that about 80% of its sales are in Europe anyway.

It sent Prestige a force majeure letter in early July, citing the restriction as being beyond its control.