Polestar will exit the United States market after the Commerce Department banned the company from selling new vehicles. This decision follows a government rule prohibiting Chinese software in connected cars. The ban targets cameras and GPS tracking systems that officials believe foreign adversaries could exploit to gather intelligence or monitor movements.

Controlled by Zhejiang Geely Holding Group, the EV brand attempted to secure authorization to keep selling cars through a specific process outlined in the rule. The Commerce Department denied that request on Thursday. This makes the Volvo spin-off the first major victim of the security crackdown on Chinese-linked automotive technology.

Existing owners are not left stranded, as the company will sell off remaining stock and maintain service centers for repairs. This move signals a hard line on national security regarding connected vehicle data. The government is prioritizing the removal of foreign software over the market presence of Chinese-owned manufacturers.