Shares of Enphase Energy (NASDAQ: ENPH) plummeted nearly 20% in midday trading Thursday after a newly passed Republican tax bill cast fresh doubt over the future of clean energy incentives in the U.S. The legislation, dubbed a “tax and spending bill,” passed narrowly in the House of Representatives and marks a significant challenge to the Biden administration’s pro-renewables policies.
The bill specifically targets key elements of the Inflation Reduction Act (IRA), aiming to roll back or eliminate tax credits for wind, solar, and electric vehicles much earlier than originally scheduled. These credits have played a critical role in driving investments and fueling growth in the renewable energy sector. The sudden legislative shift has triggered investor anxiety, particularly around companies like Enphase Energy that rely heavily on favorable tax policies to support demand for their solar technology.
The market reacted swiftly to the news, with Enphase stock falling to $38.17 per share, down 71.6% from its 52-week high of $134.52 reached in June 2024. Year to date, the stock is down a staggering 46.5%. For long-term investors, the outlook has also dimmed: A $1,000 investment in Enphase five years ago would now be worth approximately $676.52.
Enphase wasn’t alone in Thursday’s sell-off. Other clean energy and electric vehicle stocks were also hit hard, including NextEra Energy (NYSE: NEE), Xpeng (NYSE: XPEV), and First Solar (NASDAQ: FSLR), all of which traded lower on growing concerns about the potential erosion of federal support for renewable technologies.
The proposed legislation has yet to pass the Senate, and its future remains uncertain. However, its advancement in the House has already raised alarms across the renewable energy industry and on Wall Street. Analysts warn that without continued federal incentives, companies in the solar and EV space could face reduced margins, slower growth, and waning investor confidence.
As political winds shift and the 2024 election cycle heats up, the renewable energy sector may remain volatile, caught between policy rollbacks and an uncertain regulatory outlook. For Enphase and its peers, the next few months will be critical in determining whether clean energy momentum can withstand mounting political headwinds.
