A New Jersey dealer group is suing Polestar for $25 million, arguing the EV maker is using a federal sales ban as an escape hatch from its franchise obligations, and setting up a much bigger fight with its U.S. retailers in the process.
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The Timeline
Two years ago: Prestige Imports alleges Polestar began quietly planning its U.S. exit.
June 2026: The federal government moves to bar Polestar from U.S. sales beyond the 2026 model year, citing its ownership by China's Geely.
Shortly after: Polestar sends a force majeure letter to Prestige Imports, one of 32 U.S. Polestar retailers.
Aug. 12, 2026: Prestige Imports files suit in Bergen County Superior Court, seeking $25 million.
The Core Claim
Prestige alleges Polestar's notice functioned as a constructive termination, without the 60-day notice or good cause New Jersey franchise law requires. Under that law, a lawfully terminated dealer is entitled to the franchise's fair market value plus five years of continued parts and warranty support.
The Detail That Makes This Sting
Volvo is also owned by Geely. Volvo pursued and received an exemption to keep selling in the U.S. Prestige claims Polestar never even tried.
Polestar was screwed by Polestar. It wasn't screwed by the U.S. government.
Why This Isn't Really About Polestar
Every franchise agreement in this industry assumes an automaker walks away for business reasons, poor sales, a failed model, a bad market. This case asks a genuinely new question: what happens when an automaker's exit is forced by government action instead of chosen? If a manufacturer can point to a ban and walk away clean, that's a very different set of obligations than if a court decides the manufacturer maneuvered its way into that ban on purpose.
What's Actually at Stake
Prestige is one of 32 U.S. Polestar dealers. However this settles, or however a court rules, the outcome effectively writes the rulebook for the other 31, and for any dealer holding a franchise from a brand facing geopolitical pressure it can't control.
If your franchise agreement is with a manufacturer that has foreign ownership ties currently under any kind of regulatory scrutiny, this case is worth watching closely regardless of the brand.
It's the first real test of whether "the government made us do it" holds up as a clean exit, or whether a court sees through it the way this dealer is betting one will.
