How Cummins reinvented itself for a zero-emissions future

A stunning US$3.7-billion acquisition of Meritor Feb. 22 put the exclamation point on what has been a transformative year for Cummins. The independent engine maker, once synonymous with diesel power, faced increasing pressure over the last decade as truck OEMs aggressively pursued vertical integration, tightly intertwining their own engines with related powertrain components for optimum performance.

In addition to the relentless push toward vertical integration from truck OEMs, lawmakers responding to the increasing threat of climate change began announcing ambitious plans to phase out diesel in favor of cleaner alternatives.

You’d be forgiven for questioning Cummins’ future viability. But the company has been undeterred and has in fact reinvented itself through a series of shrewd business decisions and acquisitions that have positioned it to remain a strong player in whatever fuels emerge as winners as the industry transitions to a zero-emissions future.

“There is no single solution or ‘magic bullet’ that will work for all application types or all end users.”

Srikanth Padmanabhan, Cummins

Cummins for years has been busily developing battery-electric and hydrogen-based engine technologies, which are widely viewed as the frontrunners to decarbonize trucking. But it has been busy on other fronts, as well. Here’s a recap of moves Cummins has made over the past year for other eventualities:

Medium muscle: Daimler, Isuzu and Hino all announced plans to use Cummins engines in their medium-duty trucks. For Daimler, the decision was made after investing US$5 billion in its own mid-range Detroit engine, and then opting instead to focus resources on developing its heavy-duty zero-emissions powertrain platform. Hino, for its part, struggled to meet the latest EPA emissions requirements, leading it to completely abandon its own engine in favor of Cummins. In addition to supplying Isuzu, Cummins will work with the medium-duty truck maker to jointly develop an electric powertrain. These moves solidified Cummins as a force in the diesel-powered medium-duty segment going forward.

Back on the gas: Cummins has remained a leading player in the natural gas segment, but topping out at 12 liters displacement, there was a void for Canadian fleets looking to haul heavier payloads over more challenging terrain. Cummins last October announced it will bring back to the market a 15-liter natural gas engine more suitable for the Canadian market. It also bought out the joint venture it had with Westport (including shared intellectual property), and entered into a new JV with Rush Truck Centers, taking a 50% interest in its natural gas-focused Momentum Fuel Technologies business.

No stopping: Diesel isn’t dead, but will have to become more environmentally friendly if it’s to get a stay of execution from lawmakers and society as a whole. Jacobs Vehicle Systems is best known for its Jake Brake engine retardation technology, but Cummins sees a role for cylinder deactivation in current and future diesel engine platforms. So, it bought the company for US$325 million in a move to advance current and future clean diesel technologies.

Keeping all options open: Meanwhile, Cummins was working internally to design a fuel-agnostic engine platform it announced in mid-February, which will allow it to offer a full range of lower carbon fuels using a common architecture base engine sharing common parts.

“Having a variety of lower carbon options is particularly important considering the variation in duty cycles and operating environments across the many markets we serve. There is no single solution or ‘magic bullet’ that will work for all application types or all end users,” Srikanth Padmanabhan, president – Cummins Engine Business, said in a release accompanying the announcement.

And then there’s the Meritor acquisition to unpack.

“Climate change is the existential crisis of our time. This accelerates our ability to address it,” Cummins CEO and chairman Tom Linebarger said of the acquisition during a conference call with business analysts. “Our customers need economically viable zero-carbon solutions, and axles are a key integration point.”

He noted electric axles are increasingly becoming a crucial connection point for fully integrated electric powertrains.

“We now bring the e-axle and traction section to the electric powertrain, which allows customers to think about whole systems and components, much in the same way they’ve been thinking about it from an engine point of view,” Linebarger noted. “We can provide to OEMs the whole range – full system and individual components. The electric axle is increasingly becoming the place those components are centered … the e-axle becomes the new engine block we can hook everything to.”

But aren’t electric axles a bridge technology, a hybrid stopgap of sorts that will merely help transition a segment of the industry to an all-electric future? In a follow-up interview with Today’s Trucking, Cummins president and chief operating officer Jennifer Rumsey said she believes the e-axle technology is here to stay.

“We really see the e-axle as a long-term solution,” she said.

In comments to analysts, Linebarger said a key attraction to Meritor was that its e-axle is market-ready – not a future concept.

“Meritor has products ready today that we don’t have. We aren’t waiting for a future offering,” he said, promising that Cummins will accelerate investment in Meritor’s e-axle and traction systems business.

While the e-axle is a recent addition to the Meritor portfolio, it’s certainly not what the company is best known for. So, where will brakes and traditional axles fit into the Cummins portfolio? Rumsey sees a permanent home for them in its components business.

“That’s our plan,” she said, when asked if Cummins will maintain those product lines. “We are really focused on providing key components that help our customers optimize their powertrain solutions. You’ve already seen us expand into other components you might not traditionally associate us with, such as the Eaton-Cummins joint venture that moved us into transmissions.”

As for the transformation of Cummins as a whole, Rumsey said while the company appears to have been especially busy of late, all these moves were a long time in the making.

“We’ve been preparing for some time,” she said, referring to the company’s Destination Zero strategy that will see Cummins itself and the products it offers achieve zero emissions by 2050. “You’re seeing some things now accelerating and happening this year as a key part of that. Our announcement around our intent to acquire Jacobs Vehicle Systems is an example of continuing to add key component technologies we think are important to decarbonize and optimize our base engine solution. And our intent to acquire Meritor, we view as another way to extend our components business – the components we offer – and as a key element of our new power.”

But “new power” won’t immediately displace diesel – the incumbent fuel that has dominated the heavy transport industry for more than a century. And to that end, Cummins is also investing heavily in transitional technologies, rather than focusing on one or two end solutions.

“If you look across the commercial and industrial markets we serve, our customers use those products in a wide variety of ways and environments,” Rumsey told Today’s Trucking.

“That means multiple solutions will be required and the pace and ability to adapt to zero emissions solutions will vary. Because of that reality and because of the real issue our planet faces with climate change, we need to start addressing that issue now. Our Destination Zero strategy focuses not only on technologies that can get us all the way to zero [emissions] but also decarbonizing our engine-based solutions that are broadly available and able to meet our customers’ needs today. I think it’s critical we do both those, and it’s why you see us talking about a wide range of solutions that may be a bridge – to decarbonize and move towards zero – and a range of solutions that get you to zero.”