First Solar stock plunges as Trump's polices create headwinds

Shares of First Solar, Inc. (FSLR) fell sharply by over 13% on Wednesday as the company lowered revenue forecasts for the year due to increased cost pressure from President Trump's tariffs, as well as lower demand for renewable energy.

The company said during its fourth-quarter earnings call on Tuesday that it expects revenues in the range of $4.9 billion to $5.2 billion, below analysts' expectations of $6.2 billion.

First Solar, which is the only large-scale solar panel manufacturer based in the US, is projecting lower revenue in part because of the costs associated with Trump's tariffs. The company's manufacturing in Asia - including Malaysia, Vietnam and India - have been subjected to levies on exports to the US that are between 20% and 50%.

This has forced First Solar to sell production from those countries into their domestic markets in the US at lower prices, while also shutting down some of the capacity in order to increase its domestic manufacturing.

"Tariffs also indirectly led to underlying commodity cost pressure for our variable US bill of material, including relating to aluminum, steel, glass, interlayer, targets and spares," First Solar chief financial officer Alexander R. Bradley said on the company's earnings call. "In addition, electricity rate hikes increase fixed costs. These cost increases are not contractually recoverable from our customers."

The company announced in November that it was establishing a new domestic manufacturing facility in South Carolina, which is costing it approximately $330 million to build. First Solar expects commercial operations at the new facility to commence in the second half of this year.

"Our decision in 2025 to establish a new finishing line in the US allows us to make use of a portion of the front-end of these Southeast Asian facilities, optimizing freight, tariffs and domestic content for the sale of incremental products into the US domestic market," Bradley said.

He added that the company intends to run its "remaining end-to-end in Malaysia and Vietnam at low utilization rates this year, despite the financial impact of doing so, maintaining a near-term option to increase throughput should catalysts such as the political and regulatory matters discussed earlier drive incremental profitable demand."

However, when asked by analysts about the cancellation risk by customers due to tariffs, Bradley noted that "I do not think what you have been seeing on the cancellation side over the last year has really been tariff related."

Instead, "what we have been seeing is more of a strategic shift by certain players, especially oil and gas, and the European utility players, to reallocate capital away from renewable development in the US into some of their more core business on oil and gas development or European utility development," Bradley said.

First Solar faces looming competition from Tesla

First Solar's revenue was also hit by the cancellation of an order of 6.6 gigawatts of power with Lightsource BP. The company is pursuing legal action against Lightsource BP (a BP subsidiary) and BP Solar Holding, alleging breach of contract for terminating a 6.6-GW solar module supply agreement

The lawsuit, filed in New York Supreme Court in September 2025, seeks over $400 million in damages for failed payments.

Meanwhile, an analyst on the call asked whether Elon Musk's plan to enter the solar power space has "any real impact" on the conversations that First Solar is having with its customers.

Musk, who has long been a proponent of solar energy, revealed earlier this year during an interview at the World Economic Forum in Davos, Switzerland that Tesla and SpaceX have plans to work toward 100 gigawatts a year of annual solar manufacturing within three years.

The revelation led to BMO Capital analysts to downgrade First Solar's shares, citing the potential for additional supply lowering long-term module pricing, which would be significant since First Solar has increasingly relied on higher US module average selling prices for its revenue stream.

But First Solar CEO Mark R. Widmar did not sound concerned, noting on the earnings call that Tesla's entry into the space would mainly be focused on its AI data center-related needs.

"From my understanding, a lot of that is not necessarily focused for our utility-scale market that we are primarily focused on," he said. I think it is primarily looking to be captive for their own consumption for their own programs that they are envisioning."

"It is also out on the horizon, and I think there is also a pretty strong realization of some pretty significant challenges to try to get to that type of scale," Widmar added.