With the Trump administration banning sales of connected cars linked to China, Renault Korea has been hit by "stray bullets." That is because the Renault Korea Busan plant produces Polestar vehicles, an electric brand under China's Geely Group, for export to the United States.
According to Reuters on the 26th, the U.S. Department of Commerce on the 25th (local time) did not grant sales approval for Polestar's 2027 model. Citing the Connected Vehicles Rule, introduced under the Joe Biden administration and maintained under the Donald Trump administration, the department blocked Polestar's sales in the United States.
The provision restricts the import and sale of vehicles equipped with wireless connectivity technologies such as Bluetooth and Wi-Fi that are linked to China or Russia. The United States believes connected vehicles could be exploited as so-called "spy cars," leaking sensitive U.S. information through wireless connectivity technologies. Polestar is an electric brand spun off from Volvo Cars, with China's Geely Group holding about 80% equity.
Polestar models sold in the United States are the electric sedan Polestar 3 and the coupe-style sport-utility vehicle (SUV) Polestar 4. The Polestar 3 is produced in South Carolina, but the Polestar 4 is built at Renault Korea's Busan plant and shipped to the United States.
The Busan plant began producing the Polestar 4 for North American export in September last year and started shipments in October that year. Cumulative exports through May this year totaled 4,001 vehicles. That accounted for 26.6% of the plant's total exports. Initially, it was a full contract manufacturing setup that sourced most parts from China, but over time Renault Korea localized some parts.
Geely Automobile Holdings under Geely Group acquired a 34% equity stake in Renault Korea in 2022. Geely Group then assigned production of the U.S.-bound Polestar 4 to Renault Korea's Busan plant. It was a "workaround strategy" to avoid the United States' high tariffs on Chinese-made EVs, but with the Commerce Department's latest move, the Busan plant has lost its export volume.
A Polestar Korea official said, "Because the Polestar 4 produced at the Busan plant is supplied not only to the United States but also to Canada, we are not in a situation where we must halt production immediately," but added, "There is a possibility we will adjust production volume."
Polestar is also pursuing plans to export vehicles produced at the Busan plant to regions outside North America. Polestar Chief Executive Officer (CEO) Michael Loscheller visited Korea in Nov. last year and said, "North American exports of vehicles produced at the Busan plant are only the beginning," adding, "We can leverage this production base elsewhere as well."
However, from the Busan plant's perspective, some say it will not be easy to quickly replace the gap in the United States, one of the world's largest auto markets.
An official at a finished vehicle maker said, "With shipments to the United States blocked, if we fail to quickly secure alternative export destinations, a deterioration in profitability will be inevitable," adding, "In the end, Polestar will find it hard to avoid criticism that it used Korea merely as a workaround channel to evade high tariffs."