The Department of Commerce has declined to grant Polestar (PSNY) the special authorization it needed to keep selling electric vehicles in the United States, citing the company's Chinese ownership — Polestar is majority-owned by Geely and operates under the Volvo umbrella. The ruling effectively bars new US EV sales for the brand, a significant regulatory blow that follows broader US-China trade tensions and the administration's scrutiny of Chinese-affiliated automakers.

Polestar was already in a precarious financial position before this ruling: FY2024 revenues came in at $2.0 billion, down 14.1% year-over-year, with a deeply negative gross margin of -43.1% and a net margin of -100.8%, translating to a -$0.97 diluted EPS. The US market represented a meaningful aspiration for volume growth, and losing that access eliminates a potential recovery lever.

The second-order setup is bleak. With no path to US sales near-term, Polestar is left competing in Europe and limited Asian markets while burning cash at an alarming rate. The company has no clear catalyst to reverse revenue declines, and the regulatory ban compounds the fundamental story: it is a money-losing automaker with shrinking sales and now a closed key market.

The bull case rests almost entirely on a potential diplomatic or regulatory reversal — either a trade deal that reopens access or a structural change in ownership that satisfies Commerce requirements. The bear case is straightforward: the financials were already dire, and this ruling removes the most visible path to US volume. What to watch: any Polestar response on ownership restructuring, appeals, or a partnership that could satisfy US requirements.