Canadian Solar's Q2 2025: Navigating FEOC Compliance and Conflicting Strategies in U.S. Capacity Expansion

FEOC compliance strategy and impact on U.S. capacity investment plans, FEOC impact and strategic adaptations, FEOC compliance and strategy, US energy storage market dynamics, and FEOC compliance and anticipated actions are the key contradictions discussed in Canadian Solar's latest 2025Q2 earnings call.



Module and Storage Shipments:
- Canadian Solar delivered 7.9 gigawatts of modules near the high end of their guidance and 2.2 gigawatt hours of storage, although below expectations due to tariff impacts.
- The module deliveries were driven by a strong North America mix, while storage shipments were affected by tariffs and delays.

Financial Performance and Margin Impact:
- Canadian Solar's gross margin exceeded guidance at 29.8%, benefited by a higher mix of North American module shipments and robust storage performance.
- However, profitability was affected by nonrecurring operating expenses, including legacy manufacturing asset impairments, leading to a net loss of $0.08 per diluted share.

Economic and Policy Challenges:
- The industry faced challenges due to the One Big Beautiful Bill Act, impacting supply and demand, especially with strengthened FEOC requirements and higher import duties.
- These policies could affect up to 23 gigawatts of solar module capacity, with potential moderation in cell capacity due to complex manufacturing processes and high capital expenditures.

Investment in Sustainability and Safety:
- The company continues to prioritize sustainability, reducing greenhouse gas emissions, energy, water, and waste intensities, and achieving high ethical business conduct standards across its supply chain.
- Significant progress was made in safety innovations, with successful fire testing for the SolBank 3.0 energy storage system and design awards for the EP Cube residential storage system.