An electric vehicle is fine for the morning commute, but to power the huge trains, trucks and ships that move the global economy, hydrogen, heavy-duty batteries and cleaner fuels are the ticket. Cummins, a century-old maker of dirty diesels, is leading the charge.
Cummins Inc.’s stylish, cantilevered steel-and-glass office tower in Indianapolis looks more like the headquarters of a tech company than a business that lives on diesel fumes. The incongruity continues in Columbus, Indiana, where Cummins was born a century ago and where the company’s foundation funded cutting-edge designs by I.M. Pei and Eero Saarinen for schools, fire stations and a library.
That the leading U.S. maker of diesel engines happens to be run by a Silicon Valley native with Stanford engineering degrees is another surprising twist. It’s also entirely relevant: The battle for the truck engine market will be fought on environmental territory, with Cummins taking on seemingly greener upstarts offering electric trucks.
Bring it on, says Thomas Linebarger, Cummins’ chief executive for the past decade.
“Teslas won’t drive our economy,” he says. “They’ll drive rich people.” Cummins is thriving precisely because it has been adept at meeting the ever more demanding environmental rules imposed on diesel engines. And when the day comes for battery-powered or hydrogen-fueled trucks to displace diesel entirely, Linebarger will be ready.
The lanky 59-year-old executive began laying the groundwork for an evolutionary shift at Cummins six years ago, acquiring companies with battery, hydrogen and fuel-cell expertise and setting up a new division focused solely on next-gen powertrains. Linebarger is betting that those moves and Cummins’ large global customer base can help it lead the market for cleaner trucks, buses, boats, trains, mining equipment and generators through the 2020s and beyond.
“We need solutions that will get things to market—get your mattress delivered, deliver your flowers, all this other stuff that goes on out here,” he says, pointing out a large conference room window as a heavy winter rain soaks Indianapolis. “One solution isn’t going to do it. Nobody understands the range of those solutions more than we do.”
Cummins is supplying heavy-duty hydrogen fuel cell systems to power zero-emission buses and passenger trains.
Cummins Inc.
A variety of approaches is necessary because the company’s product line is vast. Annually, Cummins supplies more than a million heavy-duty engines to power buses, Dodge pickups, Kenworth semi trucks, Bradley M2 Army vehicles, Siemens trains, fishing trawlers, mining machines and backup generators for data centers.
The environmental challenges of diesel are considerable. Besides carbon dioxide, the fuel emits black soot, a cause of heart and lung disease, and precursors to smog and acid rain. California is demanding that by 2024 commercial fleets begin replacing diesel trucks with zero-emission models. The U.S. Environmental Protection Agency intends to phase in stricter requirements for heavy trucks starting with 2027 models.
So far, Cummins’ ability to develop cleaner diesel systems to meet tighter pollution rules over the past 20 years has helped it thrive. It reported $2.1 billion of net income in 2021 on revenue up 21%, to $24 billion. Its market cap is $30.5 billion.
Transitioning the heavy-duty vehicle market from diesel fuel won’t be fast or cheap. And the winner in the long-haul market may not be the battery-powered trucks that Elon Musk is promising. It might be engines burning hydrogen from renewable sources. Taking into account the lithium mining for a battery and the partly fossil-fueled grid used to recharge it, it’s quite possible that someday Cummins’ trucks will be greener than Tesla’s.
Running a manufacturer wasn’t a likely outcome for Linebarger. He grew up in a working-class Silicon Valley home at a time when the region was defined by IBM and Hewlett-Packard rather than Apple and Google. His parents divorced when he was young, and at one point his mother turned to food stamps. “She went back to college, finished her occupational therapy degree at San Jose State and kind of just kept us moving.”
Good public schools helped Linebarger get into Claremont McKenna College and Stanford, where he earned undergraduate degrees in management and mechanical engineering. He took an internship at Cummins while completing a combined M.B.A. and master’s degree in manufacturing science at Stanford. “I wanted to build companies, not finance them,” he says.
Linebarger’s strategy to attack carbon and further cut exhaust pollution is multi-pronged, mixing conventional and high-tech options. Cummins’ engineering team plans to keep improving the efficiency of its diesel engine and generator lines while also designing them to burn cleaner fuels including natural gas and hydrogen made from renewable sources. They’re also readying hybrid options that, like Toyota’s Prius, boost fuel efficiency without the huge battery of an all-electric truck.
“Today, with the techniques we have with big data and analytics, we can design efficiency into the system in a way that we couldn’t 10 or 15 years ago. We have a target to improve the efficiency of our engines by 20% or 25% by the end of the decade,” Linebarger says. “The next step is mostly fueling; it’s not really much else to do with the engine at that point. Once you are perfectly efficient, it’s hybridization and fuel.”
Linebarger created a New Power division at Cummins in 2018 to design battery and fuel-cell power systems and hydrogen-generation technology that may supplant its diesel business by the 2030s. To shore it up, Cummins bought fuel-cell and hydrogen developer Hydrogenics, took a stake in Sion Power to develop lithium-metal batteries and started a joint venture with Chinese oil company Sinopec to produce hydrogen from renewable sources. Led by Amy Davis, New Power is initially focused on batteries and motors for light and medium trucks, and hydrogen fuel-cell systems for rail applications and stationary power generation. Long-haul hydrogen-fueled powertrains for semis are in the works but won’t likely be a core business until the late 2020s, she says.
With advances in battery packs and offerings for lighter commercial vehicles, fleet operators are “getting their head around last-mile trucks” but are concerned about replacing diesel systems in semis and heavy-duty trucks, Davis said while she and Linebarger were in Scotland for the climate-change conference in November. Cummins customers have concerns that battery-only systems—like Musk’s planned semis that go up to 500 miles—aren’t realistic. It isn’t just the size of the battery that gets in the way. It’s the paucity of charging stations.
Davis described customers asking, “What about my long haul? I couldn’t even charge three of my trucks at once, given the system that’s out there for charging. So what are we going to do?” Her answer: “The fuel-cell electric drivetrain can be quite complementary with the battery work that’s going on.”
To further bolster its clean powertrain tech, the company on February 22 unveiled a plan to buy components maker Meritor in a deal valued at $3.7 billion. “The addition of their complementary strengths will help us address one of the most critical technology challenges of our age: developing economically viable zero-carbon solutions for commercial and industrial applications,” Linebarger said of the acquisition.
Along with truck makers including Daimler, Volvo and startup Nikola, Cummins sees battery power as a viable option for heavy trucks that need only 200 miles of daily range, such as rigs hauling cargo from ports or running fixed delivery routes. For trucks needing to travel 300 miles or more between fueling, hydrogen power looks more attractive, particularly since a fuel-cell system that converts the element to electricity is lighter than a battery pack. Hydrogen’s refueling time can be comparable to that of diesel.
“I look at decarbonization and say that’s a growth opportunity for Cummins, because now innovation is going to matter a lot.”
Cummins reported sales from the New Power of $116 million last year. That number is a fraction of total company revenue but greater than the combined sales of commercial EV makers Rivian, Arrival and Nikola, which are just starting fleet deliveries.
Matthew Elkott, who covers Cummins for Cowen & Co., says the path Linebarger has laid out—blending steady efficiency gains for conventional engines and readying next-generation technology—looks right. “We don’t know yet what’s going to be the most ubiquitous technology 10 or 20 years from now, but [Cummins is] going to help migrate a lot of those customers toward whatever the future looks like.”
Cummins is building test versions of heavy-duty hydrogen systems for semi trucks.
Cummins Inc.
Tesla has lined up thousands of potential customers for the Tesla Semi that was unveiled in 2017–and that’s at least two years behind schedule. Given the EV maker’s lack of experience working with big fleets, Elkott is skeptical about how big a player Tesla or Nikola, which is also advocating for both battery and hydrogen power, will be in commercial trucks.
“The advantage [Cummins] has over someone like Tesla is this installed base of customers worldwide,” many of whom have dealt with it for decades, Elkott says. If the company says it has a compelling hydrogen-powered product and the fuel needed to power it, that’s likely to be taken seriously by companies it’s already supplying. “If I was that customer, I am more likely to choose Cummins than someone new to the market.”
Like other long-lasting global manufacturers such as Ford, Toyota and Harley-Davidson (on whose board Linebarger serves), Cummins sees engineering innovation as core to its history. Cofounded in 1919 by Clessie Cummins to advance Rudolf Diesel’s revolutionary engine, the company initially licensed a design from a small Michigan firm before developing its own direct-injection diesel engines that could run pumps, grind grain or power a saw. By the 1930s Cummins pushed into the truck market with the Model H engine that became an industry standard.
“Cummins has done best when innovation is required,” Linebarger says. “As soon as the industry kind of settles on a technology, then you’re just competing for scale and cost.”
The U.S. Clean Air Act of 1970, which forced diesel makers to clean up their products, ultimately boosted business for Cummins, which was rapidly able to bring cleaner engines to market. Linebarger expects a similar outcome as carbon dioxide becomes the enemy.
“I look at decarbonization and say that’s a growth opportunity for Cummins, because now innovation is going to matter a lot,” he says. “Innovation is what we do—and then we don’t have to compete so much on the lowest price times a million units.”
