The U.S. has become increasingly irrelevant to Polestar's growth story.

The Geely-backed EV maker said Thursday that it is "increasing its strategic focus on Europe," where much of its growth is now centered. The shift follows a decision by the U.S. Department of Commerce's Bureau of Industry and Security not to authorize Polestar to sell future model-year vehicles in the U.S. under connected-vehicle rules aimed at limiting Chinese-linked technologies on American highways.

"This follows a decision from the U.S. Department of Commerce's Bureau of Industry and Security to not grant Polestar an authorization under the current Connected Vehicle Rule to sell vehicles in the U.S. from model year 2027 onwards," Polestar wrote in a statement.

Polestar said that 94% of its retail sales volume in the first quarter of 2026 came from ex-US markets, and that, following the US Commerce Department's connected vehicle rule, it is now "increasing its strategic focus on Europe."

According to the Q1 retail sales data, which totaled 13,126 cars, the 94% figure means that the EV company sold only 788 vehicles in the US, or about 6%. This compares with the 117,300 EVs Tesla sold in the US market in the same quarter.

Michael Lohscheller, Polestar CEO, said: "The automotive industry is entering a new phase, based on regional dynamics. Our strategy reflects that, with Europe being our largest growth engine and our plan to manufacture Polestar 7 in Europe."

What Citi analyst Ross MacDonald says:

What hat Bloomberg Intelligence Says...

Polestar American depositary receipts closed down 6% on Thursday following the news. Shares are down 11% on the year and have been locked in a vicious multi-year bear market:

Bloomberg noted, "Polestar 3s for the US market are assembled at Volvo's plant in Charleston, South Carolina. A Volvo spokesperson said it was too early to speculate on any impact, adding that previously announced investments at the Charleston plant remain unchanged."