NJ Dealer Alleges Polestar Planned U.S. Exit

A New Jersey-based Polestar dealership has filed a lawsuit alleging that the electric vehicle manufacturer, Polestar, had a pre-existing plan to exit the United States market for at least two years prior to its official announcement. The lawsuit, filed by Polestar of Edison, claims that Polestar intentionally withdrew from the U.S. and used the National Highway Traffic Safety Administration's (NHTSA) Connected Vehicle Rule as a pretext for its departure. This rule, which mandates that new vehicles sold in the U.S. must be equipped with vehicle-to-everything (V2X) communication technology, was cited by Polestar as a primary reason for its withdrawal, stating that compliance would require significant and costly redesigns of its vehicles. The dealer argues that Polestar's management was aware of the impending rule and its implications for the U.S. market well in advance, and that the company's decision to leave was not a reaction to the regulation but a deliberate strategic move.

The dealership's legal filing asserts that Polestar's management team knew about the NHTSA's Connected Vehicle Rule and its potential impact on vehicle sales in the U.S. for approximately two years before the company announced its exit in January 2024. The Connected Vehicle Rule, officially known as the Federal Motor Vehicle Safety Standard (FMVSS) No. 150, requires vehicles to be equipped with dedicated short-range communications (DSRC) technology or other V2X communication systems capable of transmitting and receiving safety information. Polestar stated that its current vehicle platforms were not designed to incorporate this technology without substantial modifications, which would delay the introduction of new models and incur significant development costs. The company also cited the need to focus resources on its core European and Chinese markets.

Polestar of Edison's lawsuit seeks damages, alleging that the company's actions constitute a breach of contract and fraudulent misrepresentation. The dealership claims it invested substantial capital in establishing and operating its Polestar franchise, relying on the company's representations of a long-term commitment to the U.S. market. The dealer further contends that Polestar's use of the Connected Vehicle Rule as a justification for its withdrawal is a cover-up for a planned exit that was already in motion. The lawsuit highlights the financial strain and uncertainty faced by Polestar dealerships across the U.S. following the company's announcement, which left them with unsold inventory and uncertain futures. The dealer is seeking compensation for lost profits, marketing expenses, and other damages incurred as a result of Polestar's alleged deceptive practices.

The Connected Vehicle Rule is part of a broader effort by the NHTSA to enhance road safety by enabling vehicles to communicate with each other and with surrounding infrastructure. The technology aims to prevent accidents by providing drivers with advance warnings about potential hazards, such as vehicles braking suddenly or road work ahead. While Polestar has pointed to this rule as a significant hurdle, other automakers have indicated their commitment to integrating V2X technology into their future vehicle lineups, suggesting that compliance is achievable. The dealer's lawsuit implies that Polestar's decision was not solely driven by technical or financial challenges related to the rule, but by a broader strategic decision to cease U.S. operations, with the rule serving as a convenient justification.