A New Jersey Polestar dealer alleges the automaker planned its U.S. exit before the government ruling and left dealers to absorb the cost.
Critical Shifts:
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Allegation of a Pre-Planned Exit: Prestige Auto Group claims Polestar spent roughly two years preparing to leave the U.S. market, using a Department of Commerce regulatory ruling as a "force majeure" excuse to exit without providing standard franchise protections or notice.
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Stranded Capital Investments: Polestar continued encouraging heavy dealer spending—including approving multiyear expansion plans for Prestige as recently as February 2026—leaving franchise owners with millions in stranded capital for showrooms and facilities.
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A Strategic Choice, Not an Involuntary Ban: Unlike sister brand Volvo, which satisfied federal regulatory rules to continue U.S. operations, Polestar chose not to appeal or seek compliance, indicating its exit was a business decision driven by weak sales rather than an unavoidable government shutdown.
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Matthew Haiken, President of Prestige Auto Group, has spent his career building a dealership business around long-term manufacturer relationships. His father, Leonard “Lenny” Haiken, founded Prestige Volvo in East Hanover, New Jersey, in 1980, and Matthew eventually took over the family operation, expanding it into a modern luxury dealership group with a strong emphasis on technology and digital retailing. Now Haiken is taking one of those manufacturers to court.
Prestige Imports is suing Polestar for at least $25 million, alleging that the automaker effectively abandoned its U.S. dealers after encouraging them to make substantial investments in the brand. More significantly, the lawsuit alleges that Polestar had been preparing for a U.S. exit for roughly two years while continuing to represent that it had a future in the American market. The allegations have not been proven, but the timeline outlined in the complaint raises a question that goes directly to the dealer-manufacturer relationship: what did Polestar know about its plans to leave, and what did it tell dealers while they were still investing?
For Haiken, the issue is personal. He told The Wall Street Journal that he had invested millions of dollars in a new standalone Polestar showroom in New Jersey and stopped construction after Polestar announced its U.S. withdrawal. The lawsuit reportedly adds another important detail, alleging that Polestar approved a multiyear expansion involving Prestige's Bergen County operation as recently as February 2026, tied to the planned 2028 launch of the Polestar 7. If the allegation is supported by the documents in the case, Prestige will argue that it was still being encouraged to build for Polestar's future only months before that future disappeared.
A Dealer With a Long History
Haiken is hardly new to the franchise business. Prestige traces its roots to his father's dealership, and Haiken has spent decades representing luxury automotive brands while developing a reputation for dealership technology and digital retailing. He was named to Automotive News' inaugural 40 Under 40 list in 2012 and has also been an outspoken advocate for traditional franchise protections.
In 2020, Haiken criticized Tesla's efforts to expand its direct-sales and service model in New Jersey, arguing that franchise laws protect dealer investment and consumers. That history gives his current lawsuit an interesting dimension because the same principle is now at stake in his own operation. A dealer can commit millions to a facility, employees, equipment and marketing based on a manufacturer's plans, but cannot simply unwind those investments when the manufacturer changes direction.
Prestige says that is essentially what happened with Polestar. The lawsuit includes claims under New Jersey's Franchise Practices Act and seeks compensation for the fair market value of the franchise, damages related to the termination and five years of parts and warranty support, among other claims. The central dispute, however, is less about the amount of money than about whether Polestar lived up to the commitments it was making to its dealers.
The Timing of Polestar's Exit
Polestar's explanation for leaving the United States is straightforward. The U.S. Department of Commerce denied the company authorization to sell new Polestar vehicles beginning with the 2027 model year under the federal Connected Vehicle Rule, and Polestar decided not to appeal. The company subsequently announced that it would concentrate its investment on markets where it believed it could achieve profitable growth, particularly Europe.
Prestige's lawsuit presents a different version of the timeline. The dealer alleges that Polestar had been preparing for its U.S. departure for roughly two years and ultimately maneuvered itself into a position where the Commerce Department decision could be used to end its American operations. That is a serious allegation and one the court will have to evaluate, but the company's public messaging makes the timing particularly interesting.
In early 2025, Polestar was presenting a growth story. The company announced plans calling for 30% to 35% compound annual growth in retail sales through 2027, expansion of its retail network and new products including the Polestar 7, a compact SUV being developed with the American market in mind. The move was significant because Polestar's lineup had leaned heavily on sedans and performance-oriented vehicles at a time when American buyers, particularly in the premium market, have increasingly favored SUVs and crossovers. The Polestar 7 appeared designed to address that gap and correct one of the brand's biggest challenges in selling to U.S. consumers. Polestar was therefore talking about a larger American retail presence and a product specifically intended to strengthen its position with American buyers at the same time Prestigesays it was making long-term investments in that future.
That is what makes the February 2026 expansion allegation so important. If Polestar was still approving a multiyear dealer expansion tied to a future product only months before announcing its U.S. withdrawal, Prestige can reasonably ask whether the manufacturer knew more about its plans than it was telling its dealers. The lawsuit does not establish that Polestar misled Prestige, but it puts that question squarely before the court.
The Volvo Question
The complaint also raises an unusual comparison involving Volvo. Polestar and Volvo are both controlled by Geely, yet Volvo received authorization from the U.S. government to continue selling connected vehicles while Polestar did not. Prestige reportedly argues that Polestar had another potential route available and could have pursued an authorization similar to Volvo's rather than allowing the regulatory decision to end its U.S. business.
Polestar has said it held extensive discussions with U.S. authorities and concluded that an appeal would not succeed. The distinction is important because the Connected Vehicle Rule is not simply a ban on cars manufactured in China; it addresses connected-vehicle technology, software and supply-chain relationships involving companies connected to China or Russia. Volvo went through the authorization process and received approval, while Polestar did not.
Public comments have added another layer to the issue. Sen. Bernie Moreno has said Volvo was given a difficult list of requirements and chose to comply, while Sweden's trade minister Benjamin Dousa has said Polestar did not seek the same type of assistance Volvo did. Neither statement proves what happened inside Polestar, but the conflicting accounts help explain why the Volvo comparison has become part of Prestige's case.
The Letter That Turned a Business Dispute Into a Legal Fight
The dispute took another turn when Polestar reportedly sent Prestige a July 10 letter characterizing the government action as a force-majeure event. In general terms, that means an event outside a company's control prevented it from fulfilling its obligations. Polestar's position appears to be that the government decision made continued U.S. sales impossible.
Prestige sees it differently. The dealer argues that Polestar chose not to appeal the Commerce Department decision and then used that decision to effectively terminate the franchise without providing the notice or good cause required under New Jersey law. That distinction could become one of the central issues in the case because it goes directly to whether Polestar was forced out of the market or made a business decision to leave.
There is a legitimate business case for Polestar's decision to leave the United States. The federal $7,500 EV tax credit expired in September 2025, Polestar's U.S. sales were falling and Europe had become increasingly important to the company's business. Polestar sold 60,119 vehicles worldwide in 2025, up 34% from the previous year, but that growth was concentrated outside the United States. By the first quarter of 2026, only about 6% of Polestar's retail sales were coming from the U.S., making it increasingly difficult to justify continued investment in a market that was producing a relatively small share of the company's sales.
At the same time, Polestar had shown that it was willing to change its strategy when circumstances threatened one of its markets. Canada's 100% tariff on Chinese-built EVs threatened the planned Canadian launch of the Polestar 4, so the company shifted production of Canadian-bound vehicles to South Korea rather than abandon the market. The United States presented a much more complicated challenge, combining weak sales, the loss of EV incentives, financial pressure and the new Connected Vehicle Rule. Eventually, Polestar decided that the better business decision was to stop selling new vehicles in America rather than make the additional investment required to overcome those obstacles.
That may be a perfectly rational decision for Polestar, but it doesn't necessarily resolve Prestige's complaint. The dealer isn't arguing that Polestar should have been forced to remain in the United States indefinitely; its argument is that dealers had already committed substantial capital based on the manufacturer's stated plans for the market. If Polestar was reconsidering its U.S. strategy while continuing to approve dealer investments and promote future products such as the Polestar 7, Prestige argues that the company had an obligation to be transparent with the dealers making those investments. That question — rather than Polestar's decision to leave the U.S. itself — is at the heart of Haiken's lawsuit.
What Haiken Is Fighting For
That is what makes Haiken's lawsuit more significant than a fight over the fate of one EV brand. The franchise system depends on manufacturers and dealers making long-term commitments to each other. Dealers build facilities, hire people and invest capital because they expect the manufacturer to support the brand and the market long enough for those investments to make sense.
Prestige says it made those commitments with Polestar and was left carrying the investment when the manufacturer walked away. Polestar, meanwhile, has a very different explanation: the government prevented it from selling future vehicles in the United States, making continued operations impossible and forcing the company to redirect its resources.
The court will ultimately have to determine what Polestar knew, when it knew it, what commitments it made to Prestige and whether the Commerce Department decision actually made the franchise relationship impossible. For Haiken, however, the issue is already tangible. The millions invested in a Polestar showroom were supposed to represent a manufacturer's commitment to the future; instead, they have become part of a lawsuit over whether that commitment ever existed as strongly as the dealer was led to believe.
