Text/Alan Ohnsman
Tesla is suitable for daily commuting, but to power the big trains, trucks and ships that drive the global economy, hydrogen is key. Cummins is a century-old diesel manufacturer, and it's leading the way.
In Indianapolis, USA, Cummins Inc.'s sleek, cantilevered steel-glass office building feels more like a tech company than a company that thrives on diesel smoke. This feeling of incongruity also exists in Columbus, Indiana. Cummins was born here a century ago, and the company's foundation funded schools, fire stations and libraries designed by I.M. Pei and Eero Saarinen.
Another surprising thing is that the leading U.S. diesel engine manufacturer happens to be run by a Silicon Valley native with an engineering degree from Stanford University, and there is a correlation: In the future, the battle for the truck engine market will revolve around the environmental field, and Cummins will compete with the seemingly greener electric truck upstart.
Thomas Linebarger, who has been Cummins CEO for the past decade, is not afraid of challenges. "Tesla is not going to drive our economy," he said. "They're only going to push the rich." For Cummins, it survives to this day precisely because it is adept at meeting increasingly stringent environmental regulations for diesel engines, and Ryan Bager will be ready for the day when batteries or hydrogen trucks will completely replace diesel.
Cummins CEO Thomas Linebarger
The 59-year-old, lanky executive began paving the way for Cummins' revolutionary transformation six years ago. He acquired companies with expertise in batteries, hydrogen fuel cells and fuel cells, and created a new division dedicated to next-generation powertrains. Lane Bager believes these initiatives, along with Cummins' vast global customer base, will help the company take a leadership role in cleaner trucks, buses, boats, trains, mining equipment and generators in the 2020s and beyond.
"We need solutions to get products to market — mattresses, flowers, and other things," Lane Bager said, pointing to the window of a large conference room, just outside in Indianapolis, where it was pouring rain. "One solution is not enough. No one knows more about the scope of these solutions than we do. ”
Because Cummins' product line is very wide, it is necessary to use a variety of means. The company supplies more than 1 million heavy-duty engines annually for buses, Dodge pickups, Kenworth semi-trailer trucks, Bradley M2 Army vehicles, Siemens trains, trawlers, mining machines and data center backup generators.
The environmental challenges faced by diesel are considerable. In addition to carbon dioxide, the fuel also emits black soot, a trigger for heart and lung disease, as well as smoke and acid rain. California requires that commercial vehicles begin replacing diesel trucks with zero-emission models by 2024. The U.S. Environmental Protection Agency intends to gradually impose stricter requirements on heavy-duty trucks.
To date, Cummins' growth stems from its ability to develop cleaner diesel systems over the past 20 years to meet increasingly stringent pollution regulations. Analysts estimate that the company's net profit for 2021 is $2.2 billion, while revenue is up 21 percent to $24 billion.
Driving the fuel transition in the heavy-duty vehicle market is not easy, nor is it costly. The winner in the long-haul transportation market may not be the battery-powered truck that Elon Musk has promised, but rather a hydrogen fuel cell engine. Considering the mining links involved in lithium batteries and the part of the fossil fuel grid that will be used when charging, Cummins' trucks are likely to be more environmentally friendly than Tesla's at some point in the future.
Cummins is supplying heavy-duty hydrogen fuel cell systems for zero-emission buses and passenger trains
For Reinbagh, running a manufacturer is not an expected outcome. He grew up in a working-class family in Silicon Valley, when the dominant companies in the region were IBM and HP, not Apple and Google. Reinbagh's parents divorced when he was very young, and his mother once had to survive on food stamps. "She went back to college and completed her occupational therapy degree at San Jose State University, which also allowed us to move on with our lives."
Having attended a good public school, Lane Barger attended Claremont McKenna College and Stanford University, where he earned an undergraduate degree in management and mechanical engineering. He interned at Cummins while pursuing his MBA and master's degree in manufacturing science at Stanford University. "I want to create companies, not fund them," he said.
In addressing carbon emissions and further reducing tailpipe pollution, Reinbagh has adopted a multi-pronged strategy that blends traditional and high-tech tools. While intent on continuing to improve the efficiency of diesel engines and generator sets, Cummins' engineering team also plans to design it to use cleaner fuels, including natural gas and hydrogen made from renewable energy sources. Plus, they're preparing hybrid options, like Toyota's Prius, that can improve fuel efficiency without using the huge batteries of all-electric trucks.
"With today's big data and analytics technologies, we can design efficiencies into systems in ways that wouldn't have been possible 10 or 15 years ago. Our goal is to increase the efficiency of our engines by 20 or 25 percent by the end of the century," Said Ryan Bager. "By the next step it's mostly fuel, but that doesn't have much to do with the engine. Hybrids and fuels can achieve very high levels of efficiency. ”
In 2018, Lane Bager created a new power division, New Power, at Cummins, whose responsibilities are to design battery and fuel cell powertrains, as well as hydrogen generation technologies that could replace its diesel business in the 2030s. To support the development of the sector, Cummins acquired fuel cell and hydrogen developer Hydrogens, acquired a stake in U.S. battery company Sion Power to develop lithium-metal batteries, and formed a joint venture with Sinopec to produce hydrogen from renewable sources. Under Amy Davis's leadership, New Power will initially focus on batteries and motors for light and medium-duty trucks, as well as hydrogen fuel cell systems for railway applications and stationary power generation. Davis said long-haul hydrogen-fueled powertrains for semi-trailers are under development, but won't be a core business until the late 2020s.
Davis and ReinBagher attended the Scottish Climate Conference in November 2021. The former noted that as battery packs evolve and the supply of light commercial vehicles advances, fleet operators "are starting to focus on trucks used in last-mile scenarios," but have also expressed concern about replacing diesel systems for semi-trailer trucks and heavy-duty trucks. Cummins customers worry that battery-only systems — such as Musk's planned 500-mile semi-trailer — are unrealistic, and the problem is not just the size of the batteries, but also the lack of charging stations.
In Davis' description, customers would ask, "What about my long-haul truck?" In the current charging environment, I can't even charge three trucks at the same time. So what are we going to do? Davis replied: "The electric drivetrain of a fuel cell can complement the ongoing battery work." ”
Cummins is making a test version of the heavy-duty hydrogen system for the semi-trailer truck
To further enhance its clean powertrain technology, the company unveiled a plan on Feb. 22 to acquire component maker Meritor for $3.7 billion. "The complementary strengths of the two companies will help us solve one of the most critical technological challenges of our time: developing economically viable zero-carbon solutions for commercial and industrial applications," said Reinbagh. ”
Not only Daimler, Volvo, and truck manufacturers like startup Nikola, Cummins also sees electricity as a viable option for heavy-duty trucks that only need 200 miles a day, such as hauling goods from ports or driving on fixed transport routes. However, hydrogen energy looks more attractive for trucks that need to travel 300 miles at a time, especially in terms of weight, fuel cell systems that convert hydrogen into electricity are lighter than battery packs. In addition, the charging time of hydrogen can be comparable to that of diesel.
Cummins expects new Power unit sales to reach $130 million last year. While that figure is a fraction of the company's total revenue, it's already higher than the total sales of commercial electric vehicle makers Rivian, Arrival and Nikola, which are just beginning to deliver. Matthew Elkott, who investigated Cummins for Cowen & Co., said lane bager's planned path — increasing the stability efficiency of traditional engines and preparing for next-generation technology — looks right. "We don't yet know what the most prevalent technology will be in 10 or 20 years, but Cummins will help many customers make the transition."
Thousands of potential customers are already waiting in line for Themi, Tesla's electric truck unveiled in 2017, and the product is at least two years behind schedule. Given the electric car maker's lack of experience working with large fleets, Elcott is skeptical of tesla or Nikola's influence in commercial trucks, which are also advocates of batteries and hydrogen.
"Cummins' strength over Tesla is its global customer base," Elcott said, and there are many customers who have worked with Cummins for decades. If Cummins claims to have compelling hydrogen-powered products and the fuels needed to power it, its existing customers could seriously consider it. "If I were that client, I'd be more likely to choose Cummins over a new player."
Like other long-established global manufacturers such as Ford, Toyota and Harley-Davidson (on which Ryan Bager serves on its board), Cummins sees engineering innovation at its core. The company was co-founded in 1919 by Clessie Cummins and others to advance the development of the diesel engine invented by Rudolf Diesel. The company initially obtained a design license from a small Michigan company and then developed its own direct-injection diesel engine that could power pumps, grinding grain or cutting machines. By the 1930s, Cummins had entered the truck market with the Model H engine, which had become the industry standard.
"Cummins does it best when there's a need for innovation," Reinbagh said. "Once the industry has identified a technology, then you're just competing in scale and cost."
The U.S. Clean Air Act of 1970 forced diesel manufacturers to clean up their products and allowed Cummins to quickly bring cleaner engines to market. With carbon dioxide becoming the target of our time, Reinbagh expects similar development opportunities to return.
"When I look at decarbonization, what I see is a growth opportunity for Cummins because innovation is going to become very important," he said. "What we do is innovate so that we don't have to get involved in the fierce price wars in the market."