Prestige Imports of East Hanover has sued Polestar in New Jersey state court, seeking at least $25 million in damages over the automaker’s planned U.S. sales exit. The retailer alleges Polestar used the federal Connected Vehicle Rule to escape its long-term franchise obligations after helping create the conditions for a sales ban.

Polestar has confirmed that it will stop selling new vehicles in the United States after the 2026 model year. The Commerce Department denied the company’s request for authorization under the rule, which restricts vehicles with certain data or technology connections to China and Russia.

Dealer alleges Polestar engineered its exit

Prestige Imports operates two Polestar outlets in New Jersey. Its complaint alleges that Polestar had been planning to leave the U.S. market for about two years while continuing to encourage dealer investment.

The dealer specifically points to a multiyear Bergen County project that it says Polestar approved as recently as February 2026. According to the complaint, the project was connected to the planned 2028 launch of the Polestar 7, making the subsequent sales halt particularly damaging to the retailer’s investment plans.

Prestige claims Polestar “maneuvered the government into a ban,” arguing that the regulatory decision was used as a substitute for a conventional franchise termination. The dealer also says Polestar declined to seek comparable authorization or appeal the Commerce Department’s decision.

The complaint contrasts Polestar’s position with that of Volvo, its fellow Geely brand. Prestige says Volvo received Commerce Department authorization to continue selling vehicles under the same rule.

What the lawsuit is seeking

The case invokes New Jersey’s Franchise Practices Act and describes the sales halt as a constructive termination. Prestige is seeking the fair market value of its franchises, along with several years of continued parts and warranty support.

The filing also cites a statement from Ohio Sen. Bernie Moreno that Polestar was losing roughly $30,000 to $35,000 on every vehicle sold in the United States. Prestige presents those losses as a possible financial reason for treating the federal ban as a way to leave the market while limiting its exposure to dealer compensation.

Those claims remain allegations. The lawsuit’s outcome could depend on evidence about Polestar’s internal planning, including communications and board materials concerning its U.S. strategy and dealer commitments.

What Polestar’s U.S. sales halt means

Polestar’s new-vehicle sales will end after the 2026 model year, but dealers can continue selling vehicles already in inventory. The company has also pledged to maintain service and warranty coverage for existing owners.

That commitment means the immediate impact for buyers will depend on inventory, while the longer-term questions center on dealer coverage, parts support and resale confidence. The case may also establish how franchise agreements are handled when regulatory action prevents an automaker from continuing normal sales operations.

For dealers, the dispute tests whether a federal restriction can relieve an automaker of obligations created by its retail network. For Polestar owners, the key issue is whether the brand’s promised support remains stable after new U.S. sales end.