The Anti-involution War in China's PV Industry

The "anti-involution" battle in the photovoltaic industry has finally been upgraded to a national strategy in 2025. From the National People's Congress Standing Committee voting to pass the new version of the "Anti-Unfair Competition Law", to the People's Daily front page directly hitting the industry chaos of "module prices falling below 0.6CNY", to the Central Finance and Economics Committee meeting offering the killer weapon of "governing low-price competition in accordance with the law", the strength of the policy combination punch can be said to be the strongest in history.

However, when the industry and the outside world are looking forward to the "abdication of the king of involution", the market is playing out a magical reality - the price war is intensifying, the financial reports of leading companies are collectively "green", and the sword of Damocles of overcapacity is hanging over their heads. This "anti-involution war" that concerns the survival of the industry, is it the dawn of a breakthrough or another cycle?

The photovoltaic industry has spent ten years interpreting the legend of "scale-driven cost reduction", sweeping the global market with the cost advantage of Made in China. But when the capacity expanded to the extreme, this "snowball" model suddenly got out of control - in 2024, the entire industry chain of silicon materials, battery cells, and components fell into a vicious circle of "increasing production but not increasing profits", and the industry's profits declined year-on-year for six consecutive quarters, and most links struggled on the profit and loss line.

The financial report data of leading companies is shocking: TCL lost 9.818 billion yuan, Longi Green Energy lost 8.618 billion yuan, and Tongwei Co., Ltd. lost 7.039 billion yuan... The entire photovoltaic equipment sector plummeted by 126.34% in profits in 2024, and listed companies lost more than 50 billion yuan in total. What's even more absurd is that the lowest bid for the Huadian Group's component procurement project is only 0.62 yuan/W, while the cost of mainstream TOPCon components is generally above 0.7 yuan/W. Companies are willing to "pay for charity" to grab orders.

The black hole of overcapacity is devouring the vitality of the industry. In 2024, my country's module production capacity will reach 1156.5GW, while the global demand is only 584GW. The utilization rate of polysilicon production capacity is less than 50%, which means that one out of every two silicon wafers produced is idle. On the technical level, TOPCon efficiency is approaching the theoretical limit of 25.5%. BC, HJT, perovskite and other technical routes are in a melee, and there are very few companies that can really break through with technology premium.

Despite the frequent voices of policies and industry associations, the "anti-involution" action seems to be trapped in the dilemma of "pressing down the gourd and floating the dipper". Behind the intensifying price war is the superposition of multiple structural contradictions:

1. The abnormal orientation of the bidding mechanism

The minimum reference price of 0.68 CNY/W set by the industry association is in name only, and in actual operation, "the lowest price wins" is still the iron rule. If enterprises do not bid at low prices, idle production capacity will directly lead to cash flow interruption; if they take orders at low prices, losses in the delivery stage will further erode profits. This "prisoner's dilemma" makes the anti-involution slogan become empty talk.

2. Zombie survival of backward production capacity

In order to protect employment and output value, local governments acquiesce in the continued operation of production lines with backward technology. These "zombie enterprises" grab orders at low prices with their low-cost advantages, further squeezing the living space of advanced production capacity. On the one hand, advanced production lines have not yet recovered their costs, and on the other hand, backward production capacity is frantically "disrupting the situation", and the industry is trapped in a "double-lose" quagmire.

3. Mismatch anxiety of technical routes

It took only one year for N-type components to replace P-type, and TOPCon has not yet gained a foothold. New technologies such as BC, HJT, and perovskite have taken turns to take the field. Enterprises are caught in a "betting dilemma" in choosing technical routes: if they invest too early, they may become "martyrs", and if they invest too late, they will miss the opportunity. Hanergy's lesson is not far away, but the pressure of technological iteration forces enterprises to blindly expand production at the crossroads of unclear paths.

4. The leading enterprises' game of keeping their positions

The annual shipments of leading enterprises such as JinkoSolar, JA Solar, and Trina Solar all exceed 70GW, but none of them dare to slow down their expansion. The game rule of the photovoltaic industry that "market share determines financing capacity" has put leading enterprises into the paradox of "waiting for death if not expanding production, and seeking death if expanding production". The enterprises that shout the loudest slogans against internal circulation are often the most aggressive players in expanding production.

The strong intervention at the policy level this time may open a breakthrough for the industry. From the revision of the Anti-Unfair Competition Law to the Ministry of Industry and Information Technology's interview with leading enterprises to report the cost price, the regulatory authorities are trying to reconstruct the rules of competition through institutional design. But the real breakthrough requires coordinated changes in the upstream and downstream of the industrial chain:

1. Reconstruct the bidding system

Incorporate technology, quality, and service into the core scoring indicators and establish a bidding evaluation mechanism that "prioritizes comprehensive strength". Industry associations can work with third-party organizations to develop product grading standards, provide premium support for high-efficiency components, and guide the market from "low-price dumping" to "value competition".

2. Establish a dynamic capacity control mechanism

Through capacity registration verification, illegal withdrawal and other means, strictly control the blind expansion of new capacity. Forced withdrawal of production lines with backward technology and excessive energy consumption, while encouraging leading companies to optimize production capacity structure through mergers and reorganizations.

3. Technological innovation and scenario expansion dual-wheel drive

Enterprises need to transform from "price killers" to "technology players", increase investment in R&D of cutting-edge technologies such as TOPCon and perovskite, and explore new application scenarios such as "photovoltaic + energy storage" and "photovoltaic hydrogen production" to open up incremental market space. For example, through the layout of energy storage business, Trina Solar's energy storage shipments in 2024 increased by more than 100% year-on-year, providing companies with new profit growth points.

The "anti-involution" war in the photovoltaic industry is essentially a transformation from "quantity carnival" to "qualitative leap". The intervention of policies has set a bottom line for the industry, but the real breakthrough still requires enterprises to break away from the path dependence of "winning by price" and return to the origin of "value creation".

If the vicious cycle of low-price competition can be completely broken this time, the photovoltaic industry is expected to usher in a new era of technology-driven and quality-first; if it is just slogan-style governance, the industry may be waiting for a deeper winter.

In this key battle related to global energy transformation, there are no bystanders. Whether it is policymakers, corporate managers or investors, they all need to continue to work hard on technological innovation, institutional design, and ecological reconstruction with a long-term perspective. After all, the ultimate battlefield of the photovoltaic industry has never been a price fight, but who can be the first to reach the other side of "high-quality development".