# Polestar Confronts Ambiguity Amid Suggested US Prohibition on Chinese Connected-Car Technology
Polestar, the Swedish electric vehicle (EV) producer, has recently become embroiled in a contentious discussion regarding proposed US regulations that could profoundly affect its operations. While the company has progressed in enhancing its charging infrastructure—such as obtaining access to Tesla’s Supercharger network—its prospects in the US market might be threatened by new regulations aimed at Chinese-connected car software and hardware. Should these rules be implemented, they could effectively prevent Polestar vehicles from being driven on US roads, despite the company’s initiatives to decentralize production and decision-making beyond China’s borders.
## The Suggested Prohibition: Key Details
The proposed US regulation intends to prohibit Chinese connected-car software starting with model-year 2027 and Chinese connected-car hardware by model-year 2030. This initiative is part of a wider protectionist movement in US policy, targeting decreased reliance on Chinese technology and addressing perceived national security threats. The stipulation would be applicable to all automakers, including those linked to China, irrespective of their vehicle manufacturing locations.
Polestar, listed on NASDAQ and headquartered in Sweden, faces particular risk from these regulations. Even though the firm manufactures its Polestar 3 SUVs in South Carolina and plans to produce the Polestar 4 in South Korea, it maintains connections to China through its parent company, Geely, and employs around 280 staff members in China out of a global workforce of 2,800.
## Polestar’s Reservations Regarding the Proposed Regulation
Polestar has raised various concerns about the proposed regulation, which it articulated in a public comment directed to the US Commerce Department. One of the primary issues raised by the company is the expansive definition of “Chinese connected-car technology,” which it claims engenders “crippling uncertainty for businesses.” Polestar proposes that a more explicitly defined roster of prohibited technologies would aid automakers in comprehending and adhering to the mandates.
Another point of dispute is the rule’s emphasis on ownership rather than operational governance. Polestar contends that if a substantial portion of manufacturing or software development takes place outside of China, mere ownership by a Chinese organization should not serve as the deciding factor for enforcing the ban. The company underscores that its decision-makers are located in Sweden, and seven out of its ten board members hail from Europe or the United States. With this structure, Polestar argues that national security apprehensions regarding Chinese influence are exaggerated in its context.
## Wider Consequences for the Automotive Sector
Polestar is not the only car manufacturer that may be influenced by the proposed regulation. Major US players like General Motors (GM) and Ford could also encounter obstacles. Both firms currently import vehicles from China, including the Lincoln Nautilus and Buick Envision, which would fall under the prohibition. The US Commerce Department has already notified these manufacturers that they need to cease imports of these models should the rule be enacted.
The suggested regulations are part of a larger pattern of protectionist measures aimed at limiting Chinese influence in the US automotive market. Earlier this year, the revised **Clean Vehicle Tax Credit** excluded EVs manufactured in China or containing Chinese components from eligibility. Moreover, the US has applied pressure on Mexico to avoid providing incentives to Chinese automakers seeking to set up operations in North America. Chinese-produced EVs have also faced a 100% tariff since May 2024.
## Global Perspective: China’s Impact on the EV Sector
China’s local car market has been experiencing a downturn for several months, prompting the Chinese government to significantly subsidize its automotive industry’s exports. These subsidies form part of a broader initiative to establish dominance in the global EV sector, particularly concerning green technologies. Chinese EVs have begun gaining a foothold in Europe, leading the European Union to impose a 35.5% tariff on Chinese-manufactured EVs. Nonetheless, numerous European automakers have voiced concerns regarding possible retaliatory actions from China.
Polestar’s predicament reflects the wider challenges confronting manufacturers tied to China. As governments worldwide, especially in the US and Europe, strive to shield their domestic industries from Chinese competition, organizations like Polestar must navigate an increasingly intricate regulatory environment.
## Polestar’s Prospects in the US Market
In spite of these hurdles, Polestar remains dedicated to the US market. The company has already undertaken measures to localize production, with its Polestar 3 SUVs being assembled in South Carolina. Furthermore, Polestar drivers in the US now benefit from access to Tesla’s extensive Supercharger network, enhancing the brand’s attractiveness to American consumers.
However, the imminent risk of the suggested ban on Chinese connected-car technology could complicate Polestar’s ambitions. The company has urged the US Commerce Department to reevaluate the regulation’s reach, asserting that its Swedish headquarters and European management diminish any forthcoming national security risks. Whether these arguments will persuade policymakers remains uncertain.
## Conclusion
Polestar’s situation underscores the escalating tension between global supply chains and national security imperatives.
