PSNY Stock Loses August Race To Chinese EV Rivals — Unexplained US Ban Deals Polestar A Fresh Blow

• Polestar says it still does not understand why U.S. regulators blocked its 2027 models while approving Volvo.
• The company can sell existing U.S. inventory, but one dealer is seeking at least $25 million in damages.
• Polestar cut its workforce by 25% and completed $640 million in debt-to-equity conversions this year.

Shares of Polestar Automotive Holding (PSNY) have underperformed their Chinese EV peers in August, with the company’s exclusion from the U.S. market adding fresh pressure despite record first-half sales and an expanding European retail network.

PSNY stock fell 8.3% over the past month, trailing Chinese EV players Li Auto, Nio, and XPeng, which rose 1.2%, slipped 0.9% and fell 5.9%, respectively, while BYD gained 7%. Among U.S. rivals, Tesla climbed 11.9% and Rivian gained 5.7%, while only Lucid fell, plunging 16.5%. 

Polestar Questions US Ban

In an Aug.18 letter reviewed by The Wall Street Journal, Polestar told dealers it still did not understand why the Commerce Department blocked its new vehicles beginning with the 2027 model year, while allowing corporate cousin Volvo Cars to remain.

The Commerce Department denied Polestar authorization under its Connected Vehicles rule on June 24. The regulation restricts Chinese-linked vehicle connectivity technology, including Bluetooth, Wi-Fi and cellular systems, over national-security concerns. Polestar, majority-owned by China’s Zhejiang Geely Holding, said it answered government questions throughout 2025 and offered safeguards covering data storage, access, audits and cybersecurity reviews.

The company expected approval after Commerce cleared Volvo in May. Instead, Polestar became the first automaker effectively pushed out of the U.S. under the rule.

The decision is notable since the Polestar 3 and Volvo EX90 share a South Carolina production line and use similar hardware and software. Polestar reportedly called the different treatment “contrary to law” but does not plan to appeal. It can continue selling existing Polestar 3 and Polestar 4 inventory and servicing owners. However, one of its nearly three dozen U.S. dealers is suing for at least $25 million after investing in a dedicated showroom.

Polestar Pivots Toward Europe

Polestar sharpened its European focus after the U.S. decision. Europe accounted for close to 80% of first-half retail sales. CEO Michael Lohscheller told Reuters he was unhappy about leaving the U.S., but acknowledged it “was not a profitable business for us.” Polestar entered Estonia, Latvia and Lithuania in June, taking its presence to 31 markets. Its retail network grew 39% to 235 locations, approaching its target of 250 by the end of 2026.

The automaker plans to build the Polestar 7 in Europe. Production of a new Polestar 4 SUV variant has started ahead of fourth-quarter deliveries, while the first Polestar 5 customer deliveries are also approaching.

Polestar Cuts Jobs To Lower Costs 

Polestar reported record first-half retail sales of 30,423 vehicles, although second-quarter volumes fell 4% from a year earlier. To lower costs, it has cut staffing by about 25% to 1,700 employees and is consolidating production.

Geely Sweden Holdings and Volvo Cars converted $366 million of shareholder loans into equity in June, taking their total 2026 conversions to roughly $640 million. Polestar also extended a Geely-backed loan to June 2027 and expanded its Green Trade Finance Facility to 450 million euros. 

Polestar’s Valuation Shrinks To $1.82B

Polestar went public in June 2022 at a valuation of $20 billion to $27 billion, backed by Volvo’s manufacturing expertise and Geely’s financial support. It subsequently missed delivery targets, suffered production and software delays, and used discounts that squeezed margins.

Even after 2025 sales rose 34% to a record 60,119 vehicles and revenue climbed 50% to $3.06 billion, Polestar posted a $2.36 billion net loss. Currently, PSNY stock has fallen about 40% in 2026 to $12.54, reducing its market value to $1.82 billion.

How Do Retail Traders Feel About PSNY?

On Stocktwits, retail sentiment for PSNY was ‘bullish’ amid a 67% decline in 24hour message volumes.

One user said, “$PSNY great cars but extremely poorly run! Still could see another downfall of 40%…I think a market cap under 1bil is fare”

Another user said, “$PSNY anyone else thinking they may never sell enough cars to be a viable business ?  Each Qtr seems to be a bad surprise for Profit.”

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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