The solar photovoltaic (PV) industry has undergone a dramatic evolution over the past decade, growing at an average rate of 48 percent per year to a global market size of 31 GW in 2012, and with the price of crystalline-silicon PV module as low as $0.72/W in September 2013. To examine this evolution we built a comprehensive dataset from 2000 to 2012 for the PV industries in the United States, China, Japan, and Germany, which we used to develop a model to explain the dynamics among innovation, manufacturing, and market. A two-factor learning curve model is constructed to make explicit the effect of innovation from economies of scale. The past explosive growth has resulted in an oversupply problem, which is undermining the effectiveness of “demand-pull” policies that could otherwise spur innovation. To strengthen the industry we find that a policy shift is needed to balance the excitement and focus on market forces with a larger commitment to research and development funding. We use this work to form a set of recommendations and a roadmap that will enable a next wave of innovation and thus sustainable growth of the PV industry into a mainstay of the global energy economy.