A Polestar dealer has filed a $25 million lawsuit against the electric carmaker, alleging the company is using the federal government's move to ban it from selling vehicles in the U.S. to avoid payments it owes retailers.
The details: The $25 million lawsuit, filed by New Jersey dealer group Prestige Imports in Bergen County Superior Court on Aug. 12, specifically alleges that Polestar violated New Jersey's Franchise Practices Act, according to Road & Track.
Under the act, Prestige Imports is reportedly entitled to payment of the franchise's fair market value, plus five years of continued parts and warranty support.
The dealer group, which operates Prestige Polestar in East Hanover and Polestar Short Hills, alleges the automaker planned its U.S. exit for two years and “maneuvered the [government] into a ban.”
Why it matters: The lawsuit could have broader implications for Polestar's U.S. retail network by testing what financial and support obligations the automaker has to dealers if federal restrictions effectively force the brand out of the market.
OUTSMART THE CAR MARKET IN 5 MINUTES A WEEK
Get insights trusted by 55,000+ car dealers. Free, fast, and built for automotive leaders.
Between the lines: The crux of the complaint centers on a formal “force majeure” letter Prestige Imports received following the June announcement that Polestar would be barred from selling vehicles in the U.S. beyond the 2026 model year due to its ownership by Chinese automaker Geely.
Prestige Imports, one of 32 Polestar retailers in the U.S., interpreted the notice as a constructive termination of its franchise and alleges it was unlawful because the dealer wasn't given 60 days' notice or good cause.
New Jersey law limits automakers from terminating franchises unless the dealer has breached its obligations, with Prestige Imports claiming it has met every requirement.
Prestige Imports' lawsuit also alleges that Polestar declined to pursue an exemption similar to one granted to Volvo, which Geely also owns.
Polestar had not commented on the lawsuit at press time, but the potential fallout could be significant for the automaker and its parent company Geely, which reported record auto revenue of CNY 345.2 billion ($49 billion) in 2025, up 25% year over year, with core net profit of CNY 14.41 billion.
Bottom line: The lawsuit underscores the potential financial and legal fallout for dealers when government restrictions disrupt an automaker's ability to operate, with the outcome potentially influencing how Polestar's remaining U.S. retailers are compensated and supported if the brand is forced out of the market.
A quick word from our partner
The right inventory makes everything easier.
Every week, CarMax Auctions gives franchise and independent dealers access to thousands of vehicles — so you can stock your lot with the right cars for your customers.
Wide variety of years, makes, models, and miles
50+ locations nationwide with 100% online bidding
Upfront condition announcements
Free 7-day arbitration*
Register for free with no obligation.
*Restrictions apply. Visit carmaxauctions.com for details.
