Great News For Tesla, Polestar Banned From The US

By Douglas A. McIntyre Published Jun 26, 9:59AM EDT

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Tesla gains the most from the Chinese EV ban, as well-built rivals priced under $25,000 could devastate its critical US home market.
GM and Ford absorbed nearly $30 billion in EV write-offs exiting the sector, leaving Tesla with far more to lose from any Chinese EV invasion.
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Great News For Tesla, Polestar Banned From The US — © Polestar 2 (2024) (BY 2.0) by usf1fan2

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 | GM Price Prediction) 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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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.