Polestar Faces $25M Lawsuit Over US Exit by Prestige Imports

- Prestige Imports sues Polestar for $25 million over alleged violation of New Jersey franchise laws - Lawsuit underscores regulatory and legal risks for US dealers amid growing scrutiny of Chinese-linked EVs On August 14, 2026, CoinDesk reported that Prestige Imports, a major Polestar dealer in New Jersey, filed a $25 million lawsuit against Polestar in Bergen County Superior Court. According to CoinDesk on August 14, 2026, the suit alleges that Polestar orchestrated a deliberate US market exit by declining to pursue federal clearance to sell connected vehicles, and that the company breached New Jersey franchise laws by failing to give notice and falsely blaming federal regulations for terminating the dealership. According to court documents cited by CoinDesk on August 14, 2026, Prestige claims Polestar used the Department of Commerce’s recent Connected Vehicle Rule as its justification to exit. This rule blocks vehicles using Chinese- or Russian-controlled software as of the 2027 model year. However, CoinDesk reported on August 14, 2026, that unlike Geely-owned sibling Volvo Cars, which obtained a federal waiver to continue US sales, Polestar did not seek similar regulatory relief or contact US authorities. The complaint further alleges that Polestar spent two years planning its withdrawal and, during that time, chose not to seek intervention from the Swedish government or obtain a Commerce waiver. Instead, according to CoinDesk on August 14, 2026, Polestar sent Prestige a force majeure letter asserting the federal ban was beyond its control. Meanwhile, Prestige contends that Polestar violated the New Jersey Franchise Practices Act by failing to provide the required 60-day notice or demonstrate “good cause” for the termination. As a result, the dealership is seeking damages equal to the franchise’s fair market value and a five-year guarantee for parts and warranty support. Analysts cited by CoinDesk on August 14, 2026, say the case could set a precedent and raise broader questions about the extent of legal protections for dealers when manufacturers face regulatory bans, especially as federal scrutiny on Chinese-connected EVs grows. Therefore, Prestige warns that automakers could exploit regulatory denials to bypass state franchise obligations. In addition, the suit highlights contrasting approaches within Geely’s US operations. Automotive News reported that Volvo Cars continues to sell in the US after securing regulatory approval, while Polestar ceased operations despite sharing models and production sites. According to Automotive News, after the Commerce Department’s decision involving Polestar, the company’s NYSE stock dropped by more than 13%. InsideEVs reported that Polestar has stated it will support existing US owners but confirmed the sales ban remains in effect. Reports from CoinDesk on August 14, 2026, as well as separate coverage from Automotive News and InsideEVs, indicate that the Prestige Imports suit centers on several issues. These include allegations of a planned market exit, selective regulatory compliance, franchise law violations, and the broader impact of regulatory crackdowns on Chinese-affiliated automakers. Taken together, the case signals potential shifts in US dealer relations and underscores the legal uncertainties facing manufacturers navigating new federal rules on connected vehicles.