Polestar Dealer Sues for $25 Million Over Connected Vehicle Rule Exit
August 24, 2026
TLDR: Prestige Imports, which operates Polestar Short Hills in New Jersey, sued Polestar on August 13 for at least $25 million. The complaint alleges the automaker planned its US exit for roughly two years and used the Connected Vehicle Rule denial as cover. Polestar sent the dealer a force majeure letter in early July. The suit seeks constructive termination of the franchise plus five years of parts and warranty support.
$25 million is the minimum Prestige Imports is seeking from Polestar in a complaint filed August 13, reported by Automotive News. The dealer operates Polestar Short Hills in New Jersey. The core allegation is that Polestar had been planning its withdrawal from the United States for roughly two years and used a federal regulatory decision to mask a retreat it had already chosen.
February 2026 is the date the complaint points to as its strongest evidence. The dealer alleges a Polestar executive approved a multi-year facility expansion in Bergen County, New Jersey as recently as that month, tied to a planned 2028 Polestar 7 launch. A manufacturer approving dealer capital against a product two years out is difficult to square with a manufacturer that has been preparing to leave the market since 2024. That factual conflict is what the case turns on, and it will be litigated with internal documents rather than with regulatory interpretation.
Early July is when Polestar sent Prestige a force majeure letter, arguing the government restriction was outside its control. That is the argument the case actually tests. Force majeure excuses performance made impossible by an outside event. It does not ordinarily excuse an exit the party had already decided on, and it does not obviously override a state franchise statute, which is what the dealer is invoking.
New Jersey franchise law limits a manufacturer’s ability to terminate a dealer absent a breach by the dealer. Prestige claims it met every obligation and is asking for constructive termination on grounds that Polestar provided neither the required 60 days of notice nor a showing of good cause. It seeks the fair market value of the franchise plus five years of parts and warranty support, which is the practical item: a dealer left holding a defunct badge still has customers with vehicles under warranty and no parts pipeline.
The regulatory facts underneath deserve precision, because the shorthand in general coverage is wrong. The Connected Vehicle Rule restricts Chinese-controlled vehicle software and data systems. Polestar was denied authorization under it. Volvo Cars, owned by the same parent, holds a US authorization granted in May 2026, which is the clearest available demonstration that the rule adjudicates software control rather than ownership or build location. GCBC applied the same distinction to the Ford and Geely arrangement in Valencia. A denial under that rule is a finding about a specific remediation submission, not a blanket exclusion, which weakens the impossibility argument considerably.
Roughly 32 US stores carried the badge when the denial landed, and Polestar’s US volume was never large enough to make any of them a franchise-dependent business on its own. That is not the point. The point is the precedent. If a regulatory denial discharges an automaker’s franchise obligations, then any manufacturer facing a costly US exit has an incentive to find one. If it does not, then the cost of leaving the United States now includes the fair market value of every store plus years of parts support, and that number goes into the model before the exit is announced rather than after.
