Polestar abandons the U.S. new-car market after regulatory denial — a strategic retreat that reshapes its path

BIS blocks Polestar from selling MY27+ vehicles; the company pivots to Europe and a Polestar 4-led volume story as losses persist.

PSNY · Earnings Call · 2026-09-03

A decisive pivot away from the U.S.

The most consequential news in Polestar's Q2 2026 report is not in the financials but in the strategic withdrawal it forces. The U.S. Department of Commerce denied Polestar's application for an authorization under the connected-vehicle rule, barring the company from selling vehicles in the U.S. from model year 2027 onward. CEO Michael Lohscheller was unambiguous:

We will not appeal and accept this decision. That means like we will sell model year '26 now in the U.S., but are not able to sell model year '27. Obviously, we'll continue with service and used car business in the U.S. We'll stay there, but we will not appeal that decision.
Michael Lohscheller, CEO · 2026-09-03

This marks a sharp reversal from earlier positioning. As recently as March 2026, Lohscheller described the U.S. as a key growth market with a solid local-manufacturing setup: “the manufacturing footprint we set up is quite good because, obviously, as you know, we produce also in North America, also now in South Korea, but there is uncertainty.” — Michael Lohscheller, CEO · 2026-04-17 And in late 2025, he emphasized that “even after the disappearance of the tax credit, the U.S. will stay an important market for us.” — Michael Lohscheller, Chief Executive Officer · 2025-09-03 The BIS decision, however, has made that commitment untenable for new-car sales, leaving only a service and used-vehicle presence.

The financial impact of the U.S. restructuring is already visible. The company recorded a ~USD 130 million material adjustment related to BIS decision, touching residual-value guarantees, inventory write-downs, and organizational changes. CFO Jean-Francois Mady outlined the burden: “The impact regarding the U.S. operation is mainly recognized in the following areas: residual value guarantee cost within revenues, net realizable value of inventory within other cost of sale and organizational changes.” — Jean-Francois Mady, CFO · 2026-09-03 This factor, combined with continued pricing pressure, led to an adjusted gross margin of negative 13% in Q2. The company's loss narrowed year-on-year only because of the absence of a large impairment charge in the prior year.

U.S. restructuring is now a dominant theme in the company's transcript, and it's a costly one. Yet management, for all the headwinds, is optimistic about a faster reduction in cash burn as it heads into H2.

Product-led path forward

With the U.S. new-car market effectively off-limits for the next model year, Polestar is concentrating on Europe and the products that can sell there. The company opened order books for the Polestar 4 SUV yesterday, in a segment that CEO Lohscheller expects to be a game-changer: “SUV trend is very strong, right? With that, the Polestar 4 really goes into the mainstream and where the big segment is.” — Michael Lohscheller, CEO · 2026-09-03 He also flagged the Polestar 2 successor as another volume driver for 2027. Meanwhile, the Polestar 5 begins customer deliveries imminently, though management has been clear it is a brand halo rather than a volume model.

Polestar 4 SUV becomes the linchpin of a portfolio that is shifting from niche coupes to mainstream SUVs. That model, along with the continued scale-up of the Polestar 4 coupe, is expected to improve mix and profitability. But the company has trimmed its full-year 2026 volume guidance to low-single-digit growth, reflecting not just the U.S. headwind but also intense EU competition.

The financial discipline is visible in cost controls: fixed costs are down, headcount has been reduced, and R&D spend fell. CFO Mady stated: “So we should expect entering H2, I would say, a significant reduction in terms of cash burn, which has been quite driven by seasonality” — Jean-Francois Mady, CFO · 2026-09-03, implying that the structural cash burn is improving as the operating loss narrows. Cash at end-June was USD 888 million, helped by recent equity raises and debt-to-equity conversions that reduced leverage.

Carbon credits and regulatory cost

One of the brighter offsets to the company's losses has been its sale of carbon credits, but that, too, is under pressure. CFO Mady noted that Carbon credit sales in Q2 fell to USD 36 million from USD 42 million a year earlier, and that the U.S. regulatory changes have reduced other operating income from such credits. Carbon credits remain an important but shrinking source of revenue, particularly as competition in the EU intensifies.

The company's transformation is clearly a work in progress. The U.S. decision forces a more focused, Europe-centric strategy, but it also removes a major source of uncertainty about future capital expenditure. As Michael Lohscheller summed up in his closing remarks: “Our focus remains on building the right product and channel mix and strengthening the underlying performance of the business.” — Michael Lohscheller, CEO · 2026-09-03 With cost discipline now deeply embedded and a refreshed product lineup, Polestar is betting that a leaner operation can eventually turn the corner — even if the U.S. market will no longer be part of that story.