No Clean Energy Company Is Safe From Tariffs

When Donald Trump unveiled his now-infamous chart of “reciprocal” tariffs, most of the stock market shuddered — but there were a few exceptions, including the American solar manufacturer First Solar. While the market in the days following “Liberation Day” was on a hunt and destroy mission for stocks of renewables companies known to be heavily exposed to Asia or independent power producers, First Solar stayed roughly flat.

It’s not flat anymore. The company reported first quarter earnings on Tuesday that were short of analysts’ expectations and lowered its expected revenue and profit for the rest of the year citing disruptions from tariffs. The stock has fallen more than 9% on Wednesday, and is down a third so far this year.

“While FSLR” — a.k.a. First Solar — “is the US solar manufacturing bellwether, they are not immune to the far-reaching tariff environment,” Andrew Perocco, a Morgan Stanley analyst, wrote in a note to clients. He also estimated that almost half of First Solar’s manufacturing capacity is in Asia.

The company’s sobering results and warnings about how tariffs could affect their business is a sign that the entire green energy business is likely at risk from uncertain trade policy, even the companies thought to be insulated.

First Solar and other companies’ tariff-affected financial results also show that the Inflation Reduction Act has only been partially successful at boosting American production of green energy technology, and that the country’s green industries are still deeply intertwined with Asian and Chinese production.

“We had been expecting negative effects from tariffs for First Solar, but the impact was greater than we expected,” Brett Castelli, an analyst at Morningstar, wrote in a note to clients.

First Solar chief executive Mark Widmar said that the uncertainty about the reciprocal tariffs — set to back into effect in July absent new trade deals — “has created a challenge to quantifying the precise tariff rate that would be applied to our module shipments into and beyond the second half of this year.”

Widmar said the company expects to move its manufacturing facility in India “away from exports to the U.S.,” and instead will have it produce solar panels for the domestic Indian market. Its factories in Malaysia and Vietnam may see reduced production due to “potentially reduced U.S. demand environment for non-domestic product.”

Widmar also called out the ever-evolving policy around Chinese solar imports into the United States. Solar panels from China itself, as well as four Southeast Asian nations face punitive import duties as high as 3,521% after the federal government determined Chinese companies were “dumping” panels on the U.S. market and trying to circumvent tariffs by moving production to neighboring countries. Widmar said there had been a “surge” of cells and modules from Laos and Indonesia.

“We have no doubt that these Chinese manufacturers are also seeking to establish production and other regions around the world, such as Saudi Arabia, forcing us into a continued game of whack-a-mole,” Widmar said.

Several analysts downgraded the company, with Jefferies analyst Julien Dumoulin-Smith writing in a note to clients that there were questions about “about the profitability of its core business.”

That the tariffs have affected First Solar, long held out as a kind of American solar manufacturing national champion, bodes poorly for much of the rest of the renewable industry, which is still often tightly linked to Asian nations and especially China.

There have been some hints that there’s no safe ground from tariffs in the U.S. clean energy industry. The most vertically integrated green technology company in the United States, Tesla, has flagged repeatedly to investors and the public that it’s at risk from tariffs, whether for certain parts of its cars or, especially, for its stationary storage batteries — which, like much of the rest of the storage industry, relies on a Chinese supply chain.

“Given the majority of the [battery electric storage systems] components with some dependency on Chinese supply chain, solar-plus-storage projects in particular may face significantly increased costs,” Widmar said. Morgan Stanley’s Perocco described Widmar’s comments on solar-plus-storage as a “negative read-through for other utility-scale solar and storage exposed stocks,” such as Array Technologies, Shoals Technology Group, and Fluence. Array and Shoals are down 10% and 3% respectively, while Fluence is about flat on the day.