Great News For Tesla, Polestar Banned From The US

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Polestar will be blocked from selling EVs in the US. It doesn’t matter. Polestar sales were close to zero so far this year. To sell its 2027 models, Polestar needed permission under the Connected Vehicles Rule. The regulation essentially prohibits the import and sale of cars with connected-vehicle technology owned or controlled by companies in China. Virtually every other vehicle made by a China-based company is already in a similar position from a sales standpoint. At the head of this list is BYD, the world’s largest EV maker. Beyond connected-vehicle regulations, the US imposes high tariffs on Chinese EV trucks and cars.

Polestar never gained traction in the US, despite having several dealers. It had the money to at least make a significant effort to sell its cars in America. It is majority owned by the Chinese car giant Geely Holding.

Who wins based on the ban? At first glance, GM (NYSE: GM) and Ford (NYSE: F). Each was worried Chinese EVs would damage their sales. However, each has exited the EV market. That means the threat would be to their gas-powered car sales. Even if Chinese EVs are inexpensive and have impressive features, they are not what will get the huge majority of Americans to turn their backs on fossil-fueled engines (Americans love them too much). GM and Ford took write-offs totaling almost $30 billion as they exited the sector. They understood EV demand was weak, no matter who made or sold them.

The one company that benefits most is Tesla (NASDAQ: TSLA). The US, its home market, remains its most important market by sales. Its sales are healthy in China, and are coming back in the EU. However, it could barely survive an onslaught of well-built EVs in the US, including cars priced below $25,000, if tariffs were not in place.

Tesla’s sales were hurt in the US for at least one reason, and probably two. The first is that the $7,500 federal tax credit on EVs ended on September 30. EVs across the US suffered in general. Additionally, Tesla CEO Elon Musk was involved in President Donald Trump’s early restructuring of the US government. So demand may have been hurt by that as well.

It is hard to imagine that, even as Tesla sales in the US appear to have rebounded recently, it could well withstand an invasion of Chinese EVs.

Ford has said that a US market open to Chinese EVs would do it serious harm. Perhaps. But Tesla has the most to lose.

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