Polestar looks for new suppliers in the USA due to component ban for China

Although the electric car brand Polestar is part of the Chinese Geely Group, it also builds at least the Polestar 3 model in the USA, at the Volvo plant in South Carolina. For this reason alone, Polestar does not want to give up on the US market immediately despite the ban on Chinese connectivity components. “We have a manufacturing facility in the US. We are creating American jobs,” said Lohscheller. “We will and have to find solutions because the US is a big growth market for us.”

In the last week of Joe Biden’s term, the US government effectively launched a “prohibition on the sale of connected vehicles in the United States by entities who are owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia – even if those vehicles were made in the United States,” referring to electronics, driving assistants and vehicle communication systems such as Wi-Fi, Bluetooth, cellular and satellite connectivity. The regulation is to apply from model year 2027. According to the government, the aim is to keep automotive supply chains resilient and safe from cyber threats from foreign enemies.

While none of the typical Chinese brands such as BYD, Nio or Xpeng are currently active in the USA and the market is also currently unattractive for them in view of the fairly new punitive tariffs of 100 per cent, the situation is different for Polestar: As a former subsidiary of the Swedish car brand Volvo Cars, which in turn has belonged to the Chinese Geely Group since 2010, Polestar has its headquarters in Gothenburg, Sweden, just like Volvo Cars. However, most Polestar vehicles are produced in China and the Chinese influence is also very strong in other respects.

Accordingly, Polestar is now struggling with the upcoming US ban on hardware and software systems for connected vehicles from China. As a result, Polestar is now considering finding new non-Chinese suppliers for its electric car software and other components, CEO Michael Lohscheller said in an interview, adding that Polestar has enough time to find a solution before the ban comes into effect for the 2027 model year vehicles.

In addition to the ban on Chinese components, Polestar in the USA is also confronted with the new US President Donald Trump’s order to end subsidies for electric cars and the president’s threat to wage a global tariff war. Added to this is the growing competition from Chinese rivals and Tesla in other markets.

According to the Financial Times, some analysts have questioned whether Polestar can expand in the US under the current ownership structure. According to Barclays analyst Dan Levy, Polestar will either have to withdraw from the US or be spun off into an independent company without Geely’s control and without using Geely technologies. However, Polestar CEO Lohscheller said that pulling out of the US is not an option. “I think we should hold the course,” he added in reference to Polestar’s electric vehicle strategy. “And then we will see what customers really want.”

ft.com (paywall)