The Chinese-owned automaker Polestar "orchestrated" its recent ban by the U.S. government as "cover" for its desire to leave the U.S. market, one of its largest American dealers alleged in a lawsuit filed this week.
Prestige Imports of East Hanover, N.J., doing business as Prestige Polestar and owned by dealer Matthew Haiken, alleges Polestar's decision to exit the U.S. effectively and wrongfully terminates its state dealer franchise agreement under state law. The lawsuit was filed in a New Jersey state court. The dealership claims it is owed at least $25 million in damages.
Polestar, a Sweden-based manufacturer of high-end electric vehicles, announced in June that it would stop selling new vehicles, starting with the 2027 model year, in the U.S. after the Commerce Department denied its request for a waiver.
U.S. authorities are enforcing a new "Connected Vehicles" rule aiming to prevent foreign adversaries such as China and Russia from using technology such as data transmission and cameras in vehicles to spy on Americans.
Polestar 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 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."
About a month before Polestar's exit announcement, the Commerce Department approved a waiver for Volvo Cars -- which has common Chinese ownership and other links to Polestar -- to continue selling its vehicles.
The Commerce Department and Polestar have declined to detail the factors in the decision. Haiken previously told the Journal he finds it baffling that Volvo was able to get approval to continue selling in the U.S., but Polestar was not.
In the lawsuit, filed Wednesday, Haiken's business claims Polestar "declined" to make changes that U.S. authorities wanted, thus ensuring its own demise.
"Polestar refused to engage with regulators as Volvo did, and has refused to appeal the (government) decision," the lawsuit says.
Polestar claimed the ban was 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.
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.
Haiken, who declined to comment, previously told the Journal he had invested millions of dollars to build a standalone Polestar showroom in New Jersey. He halted construction when Polestar announced it would no longer sell in the U.S., he said.
Polestar remains a niche player in the small corner of the U.S. market represented by fully electric cars. It sold 2,221 vehicles from January to July, giving it less than 1% of the EV market in the U.S., according to Motor Intelligence data.
The automaker is selling off its stock of Polestar 3 SUVs and Polestar 4 coupes, including offering up to $25,000 in discounts on the EVs.