This study investigates Chinese A-share listed companies in the new energy industry for the period 2007–2019. We shed new light on the nexus between fiscal policy uncertainty and corporate innovation investment. The main empirical findings are threefold. First, fiscal policy uncertainty significantly reduces new energy enterprises' innovation investment, and the adverse effect is mainly due to the decline in the incentive effect of government support on innovation investment. Second, product market competition reduces the adverse effect of fiscal policy uncertainty on innovation investment, which indicates that the strategic growth option theory holds to a certain extent. Third, bank credit constraint is the mechanism by which fiscal policy uncertainty restrains innovation investment. Overall, although there may be differences in the influence mechanism of fiscal policy uncertainty on innovation, the empirical evidence generally does not support the viewpoint of ownership differences. The conclusions continue to hold after controlling for endogeneity and conducting a series of robustness tests. •Shed new light on the nexus of fiscal policy uncertainty and corporate innovation investment.•Investigate A-share listed companies in China's new energy industry for the 2007–2019 period.•Findings show that the fiscal policy uncertainty significantly reduces the innovation investment of new energy enterprises.•Product market competition reduces the adverse effect of fiscal policy uncertainty on innovation investment.•Bank credit constraint is the mechanism that fiscal policy uncertainty restrains innovation investment.