- The century-old manufacturer is beefing up its sales goals for batteries, electric truck components and technology to make carbon-free hydrogen, as tougher regulations threaten its core business in the years ahead
According to Forbes article published on March 8, 2023, Elon Musk and Tesla executives recently tried to wow investors with ambitious, wide-ranging plans to make vehicles and energy more sustainable. Now Tesla’s green energy plans are facing competition from a surprising source: Cummins, a century-old industrial giant best known for making diesel engines and generators.
The Columbus, Indiana-based company has its own strategy for a multibillion-dollar cleantech business with Accelera, a new brand for batteries, fuel cells, electric truck components and electrolyzers to make “green” hydrogen from water and electricity. Cummins is folding its existing clean power products unit into Accelera after pouring $900 million into R&D and acquisitions, including the recent purchase of truck parts maker Meritor, to build up the business. Cummins CEO and president Jennifer Rumsey wants rapid growth for the unit driven by demand for non-polluting trucks—and generous new federal incentives for low- and no-carbon hydrogen production.
“We’re well understood as an engine provider, the largest independent engine manufacturer for commercial and industrial equipment, but we’re still working to be recognized for the leader that we are in zero-emissions technologies,” Rumsey told Forbes. Her hope is that a new brand more clearly differentiates the company’s low- and zero-emissions tech from its longtime business. Cleantech sales were a fraction of Cummins’ $28 billion revenue last year but could double to $400 million this year and surge through the 2020s, she said. “We’ve made a commitment to grow that part of our business to $6 billion to $13 billion by 2030.”
Much like General Motors CEO Mary Barra, who’s pushing the largest U.S. automaker to become a top seller of electric cars and trucks, Rumsey wants to position the big traditional manufacturer she leads to stay competitive in the years ahead as climate worries and regulations from global governments threaten its carbon-fueled core business. And while Musk wants Tesla to be a major player in heavy-duty trucks, he has to convince global fleet operators his new electric Semi is a more reliable, affordable option than Cummins’ heavy-duty tech.
The business opportunity—and challenge—for Cummins and other makers of commercial and heavy vehicles is enormous, running to hundreds of billions of dollars in the years ahead to replace traditional truck engines and generators. Transportation is the main source of U.S. carbon emissions, accounting for 27% of the total in 2020, and commercial vehicles spewed more than a quarter of that. New federal CO2 regulations target a 270 million metric ton reduction for future commercial vehicles, and the European Union is also pushing to ultimately phase out diesel fuel in the 2030s. That creates an existential challenge for Cummins’ diesel business but a massive new market opportunity for Accelera.
Accelera is launching with two new contracts that may be worth tens of millions of dollars: batteries and drivetrain components for 1,000 electric school buses that will be produced by manufacturer Blue Bird and a 90-megawatt electrolyzer system for a Varennes Carbon Recycling plant in Quebec, Canada, Cummins’ largest such project to date. The aim of the Canadian project, capable of generating 90 tons of hydrogen per day, is to use the green fuel to convert waste into biofuels and reusable chemicals, Cummins said.
“The hydrogen economy—honestly, everybody’s seeing the potential of it and trying to look at interesting ways to get in there.” Amy Davis, president of the Accelera unit
Growing its electrolyzer business puts Acclera in direct competition with fuel cell maker PlugPower, which has its own ambitious goals to dominate that technology, and companies including Norway’s Nel Hydrogen.
Hydrogen is used for steel and metal production, oil refining and in the chemical and food-processing industries, but it’s sourced mainly from natural gas in a process known as steam reformation that releases carbon dioxide. The shift to generating the universe’s most abundant element from water and renewable energy holds the promise of dramatically cutting industrial CO2 emissions even before hydrogen becomes a more widely used transportation fuel. Though cars and trucks are a visible source of CO2 pollution, electric power generation and industrial emissions are close behind, contributing 25% and 24% of U.S. carbon emissions, respectively.
Even Musk, a longtime critic of hydrogen vehicle technology, is moderating his view of the fuel as a way to curb carbon emissions related to manufacturing.
“It is needed for industrial processes and can be produced just by splitting water essentially,” he told investors last week. Still, the billionaire entrepreneur who built Tesla on the premise that lithium-ion batteries are the best option for both cars and large-scale energy storage reiterated his general disdain for a technology that could be a competitor to his long-term plans.
“My personal opinion is that hydrogen will not be used meaningfully in transport . . . it shouldn’t be,” he said.
“My personal opinion is that hydrogen will not be used meaningfully in transport . . . it shouldn’t be.” Elon Musk, Tesla CEO
Given that Tesla has been quick to take advantage of billions of dollars of cleantech incentives for more than a decade, Musk’s sudden interest in hydrogen may result from a new federal program in the Inflation Reduction Act signed into law last year. It provides a tax credit of up to $3 per kilogram of clean hydrogen—produced without carbon emissions—and is intensifying interest in the fuel.
“The hydrogen economy—honestly, everybody’s seeing the potential of it and trying to look at interesting ways to get in there,” said Amy Davis, president of the Accelera unit, citing conversations she’s having with a range of manufacturers and energy companies about electrolyzers. “It's going to take the oil and gas companies making moves. Then you’ll start to see a tidal shift once you get some big projects in the mobility space,” she said, declining to name specific companies.
Accelera is positioned to be a top supplier of green hydrogen tech, Davis said. “We already have a 20-megawatt electrolyzer in service today—we’re learning from it—and over 600 electrolyzer applications out in the field,” she told Forbes. “We’re a bit ahead.”
Prior to the Varennes Caron Recycling plant deal, Cummins said in December it will supply a 35-megawatt electrolyzer system to Linde, the world’s largest producer of hydrogen, to make zero-carbon hydrogen with water and electric power from Niagara Falls.
Though companies including Nikola, Daimler, Volvo, Hyundai and Toyota have plans to build a market for heavy-duty hydrogen vehicles, Cummins sees that market as taking a bit longer to develop, given the need to create a hydrogen-fueling infrastructure. Instead, Davis said that major shipping ports and more enclosed environments look like better early potential for Accelera.
“Ports because you have a whole combination of things where you can get hydrogen in that location and solve the infrastructure problems, you’ve got forklifts that are hydrogen-based and some marine applications,” she said. “Trucks are going to get there, but it’s going to have to be delayed.”
