The recent tariffs on Chinese products, along with the now paused global tariffs from other countries, are expected to have a minimal impact on US-based microinverter manufacturer Enphase Energy.
According to Badri Kothandaraman, president and CEO of Enphase, microinverters and accessories from the company are expected to have a minimal impact from these recent tariffs due to the diversification of the company’s supply chain.
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However, regarding the batteries, Kothandaraman said: “Our batteries will be more impacted as we currently source battery cell packs from China. These tariffs are expected to reduce our gross margin by approximately 2% in Q2 of 2025. The effect of the tariffs is limited in Q2 due to us having pre-tariff inventory.”
Regarding its IQ Battery 10C, he added that the company has already identified “tangible sourcing options” outside of China. According to Kothandaraman, the company expects to fully offset the impact of the tariffs starting in Q2 2026.
During the first quarter of 2025, the company shipped nearly 1.53 million microinverters, of which 1.21 million were manufactured in the US. Total microinverter shipments represent 688.5MWdc, a quarterly decrease from the 878MW shipped in Q4 2024, while its IQ Batteries shipments reached 170.1MWh, of which 44.1MWh were manufactured in the US.
‘Encouraging signs’ in the US
The US remains the company’s main revenue market, representing 74% of its revenues in the first quarter of 2025. US revenues increased from US$150 million in Q1 2024 to US$263.2 million in Q1 2025, however the revenues are down on a quarterly basis from the US$302 million registered in Q4 2024. The quarterly decline is due to seasonality and softening in customer demand, the company said, which was partially offset by safe harbour revenue of US$54 million.
“The US solar market remains under pressure from high interest rates and many installers, lease providers and distributors are navigating through a tough environment.
“That said, there are some encouraging signs. In California, installers are growing more confident selling NEM 3.0 systems, supported by strong battery attach rates,” said Kothandaraman.
On the other hand, international revenue was down on a yearly basis from US$113.3 million in Q1 2024 to US$92.9 million in Q1 2025, but is up from US$80.7 million in Q4 2024. This quarterly revenue increase was due to the company’s shipment of its FlexPhase battery in Germany.
Regarding the European market, Kothandaraman said that it continues to shift from standalone solar to solar-plus-battery solutions, “which help avoid export penalties and enable participation in retail energy markets.”
Outside of these two regions, Enphase has seen the sale of its IQ8P microinverters grow in India and is shipping batteries to the region; in Brazil, the sale of the IQ8P microinverters is expected to keep growing due to new fire safety recommendations such as rapid shutdown.
Looking to the second quarter of 2025, Enphase expects revenues between US$340-380 million and net IRA benefits of US$30-33 million based on shipping around one million microinverters manufactured in the US. Shipments for its IQ Batteries are expected to be between 160-180MWh in Q2 2025.
Earnings call commentary was sourced from Seeking Alpha.
