WEBVTT 00:00:00.000 --> 00:00:01.720 Welcome back to the Deep Dive. This is where 00:00:01.720 --> 00:00:03.640 we dig into the technical reports, the market 00:00:03.640 --> 00:00:05.980 analysis, all that dunce corporate history. And 00:00:05.980 --> 00:00:08.820 we we really distill it down into the knowledge 00:00:08.820 --> 00:00:12.199 you need. And today. We are talking about a company 00:00:12.199 --> 00:00:16.160 that is just synonymous with heavy -duty power. 00:00:16.379 --> 00:00:19.320 Oh, yeah. We are strapping ourselves into the 00:00:19.320 --> 00:00:22.399 cab of Cummins Inc., a company you hear and, 00:00:22.420 --> 00:00:24.559 well, you immediately think of Big Rigs, of that 00:00:24.559 --> 00:00:26.839 iconic diesel rumble. Right, but that iconic 00:00:26.839 --> 00:00:29.699 sound, that's both their legacy and the source 00:00:29.699 --> 00:00:32.479 of, you know, this immense pressure they're under 00:00:32.479 --> 00:00:34.380 today. Yeah, the sources we went through, they 00:00:34.380 --> 00:00:36.359 really paint a picture of a fascinating paradox, 00:00:36.600 --> 00:00:39.719 don't they? They do. Cummins absolutely mastered 00:00:39.719 --> 00:00:41.659 the internal combustion engine. They turned it 00:00:41.659 --> 00:00:45.359 into a $34 billion global powerhouse. But that 00:00:45.359 --> 00:00:48.979 same dominance came with a just a massive financial 00:00:48.979 --> 00:00:50.719 cost. I was looking at the numbers. It's nearly 00:00:50.719 --> 00:00:55.060 $2 billion in U .S. regulatory fines in just 00:00:55.060 --> 00:00:58.200 the last 25 years. $2 billion. And that's the 00:00:58.200 --> 00:01:00.500 story right there. OK, so let's unpack that. 00:01:01.210 --> 00:01:03.229 Our mission today isn't just a history lesson. 00:01:03.409 --> 00:01:05.909 It's really an exploration of corporate survival 00:01:05.909 --> 00:01:09.909 and, frankly, a radical pivot. We need to understand 00:01:09.909 --> 00:01:13.030 how a company that was founded way back in 1919 00:01:13.030 --> 00:01:16.310 in Columbus, Indiana. Right. On an engine technology 00:01:16.310 --> 00:01:18.269 that was already two decades old at that point. 00:01:18.370 --> 00:01:21.329 Exactly. How did they manage to dominate transportation 00:01:21.329 --> 00:01:24.489 and power generation? But even more importantly, 00:01:24.650 --> 00:01:28.230 why is this champion of diesel now in this aggressive 00:01:28.230 --> 00:01:31.230 high stakes race to master zero? emissions power 00:01:31.230 --> 00:01:33.790 with their new unit, Accelera. That pivot you 00:01:33.790 --> 00:01:35.549 mentioned, that's the whole story for modern 00:01:35.549 --> 00:01:38.129 Cummins. They're not just tweaking things to 00:01:38.129 --> 00:01:40.370 follow market trends. No. They are trying to 00:01:40.370 --> 00:01:42.590 pull off an industrial scale transformation. 00:01:43.519 --> 00:01:45.920 all while living under the shadow of these huge 00:01:45.920 --> 00:01:48.379 regulatory penalties. And the scale is just as 00:01:48.379 --> 00:01:49.959 hard to get your head around. It started with 00:01:49.959 --> 00:01:52.540 two people. Just two. The mechanic, Klessie Lyle 00:01:52.540 --> 00:01:54.879 Cummins, and his financial backer, the banker, 00:01:55.019 --> 00:01:57.739 William Glanton Irwin. And today, they're operating 00:01:57.739 --> 00:02:00.500 in what, nearly 190 countries and territories? 00:02:00.879 --> 00:02:04.879 A massive player. We're talking U .S. $34 .1 00:02:04.879 --> 00:02:08.819 billion in revenue for 2024 with almost 70 ,000 00:02:08.819 --> 00:02:10.819 employees globally. And the product line is? 00:02:11.419 --> 00:02:13.460 It's everything now. It's the whole energy spectrum. 00:02:13.639 --> 00:02:16.280 You've got your traditional diesel and natural 00:02:16.280 --> 00:02:19.020 gas engines, sure, but also filtration, advanced 00:02:19.020 --> 00:02:21.379 turbocharger. And then the future -facing stuff, 00:02:21.580 --> 00:02:24.199 hydrogen fuel cells, industrial batteries, all 00:02:24.199 --> 00:02:26.300 those complex components. It's a full -spectrum 00:02:26.300 --> 00:02:28.860 power company. Okay, so this is the deep dive, 00:02:29.020 --> 00:02:31.539 the race against their own legacy. Let's start 00:02:31.539 --> 00:02:34.120 at the beginning. Let's do it. Part one, the 00:02:34.120 --> 00:02:37.520 persistence of diesel, their early history. and 00:02:37.520 --> 00:02:39.240 how they built that dominance. Well, the foundational 00:02:39.240 --> 00:02:42.060 partnership back in 1919, it's a classic story, 00:02:42.199 --> 00:02:44.139 really. You have Klessie Cummins, the absolute 00:02:44.139 --> 00:02:47.180 mechanical genius. The tinkerer. Completely consumed 00:02:47.180 --> 00:02:50.560 with making the diesel engine reliable, economical, 00:02:50.819 --> 00:02:53.340 and small enough for transportation. And then 00:02:53.340 --> 00:02:56.020 you have the money. William Glanton Irwin, the 00:02:56.020 --> 00:02:59.460 banker who had the patience and, crucially, the 00:02:59.460 --> 00:03:02.060 deep pockets to fund what turned out to be a 00:03:02.060 --> 00:03:05.659 really long R &D cycle. Erwin's role is key. 00:03:05.900 --> 00:03:07.699 I mean, like you said, Cummins wasn't inventing 00:03:07.699 --> 00:03:10.280 diesel. Rudolf Diesel's patent was 20 years old. 00:03:10.400 --> 00:03:12.800 They were just trying to tame it. Take this brilliant 00:03:12.800 --> 00:03:17.139 but temperamental, expensive technology and turn 00:03:17.139 --> 00:03:19.340 it into a real product that could compete with 00:03:19.340 --> 00:03:21.340 the gasoline engines of the time. And it takes 00:03:21.340 --> 00:03:23.900 relentless funding. And, you know, because the 00:03:23.900 --> 00:03:26.240 tech was known but had basically failed to find 00:03:26.240 --> 00:03:28.520 a market, their initial success was anything 00:03:28.520 --> 00:03:31.139 but guaranteed. Right. The sources show a nearly 00:03:31.139 --> 00:03:34.750 15 -year struggle. Klessy understood that skepticism 00:03:34.750 --> 00:03:37.169 was his biggest enemy. People trusted simple 00:03:37.169 --> 00:03:40.389 gas engines. Diesel was complicated, unproven. 00:03:40.699 --> 00:03:43.180 So how do you convince the market? This is where 00:03:43.180 --> 00:03:46.520 he shifted from being an engineer to something 00:03:46.520 --> 00:03:49.259 of a showman, right? Absolutely. Klessy became 00:03:49.259 --> 00:03:51.939 a master of what the sources call well -publicized 00:03:51.939 --> 00:03:54.139 endurance trials. These weren't just lab tests. 00:03:54.500 --> 00:03:57.699 Oh, no. He deliberately sought out these grueling 00:03:57.699 --> 00:03:59.879 high visibility challenges. Imagine it's the 00:03:59.879 --> 00:04:02.780 1920s. He's putting a Cummins engine in a race 00:04:02.780 --> 00:04:04.939 car at the Indianapolis 500. Multiple times. 00:04:05.080 --> 00:04:07.360 Yeah, or driving coast to coast. Just trying 00:04:07.360 --> 00:04:09.780 to prove diesel was more fuel efficient, more 00:04:09.780 --> 00:04:12.139 reliable than anything else out there. It was 00:04:12.139 --> 00:04:15.300 extreme public proof of concept. It's a genius 00:04:15.300 --> 00:04:17.819 marketing strategy for a technical product. Make 00:04:17.819 --> 00:04:20.740 it exciting. But even those spectacles didn't 00:04:20.740 --> 00:04:23.040 lead to huge sales right away. Where was the 00:04:23.040 --> 00:04:25.540 real commercial breakthrough? It didn't come 00:04:25.540 --> 00:04:28.980 until 1933. And this is the surprising part. 00:04:29.579 --> 00:04:32.800 The first confirmed commercially successful product 00:04:32.800 --> 00:04:37.350 was the Model H engine. Okay. And its application 00:04:37.350 --> 00:04:39.990 wasn't in a big truck on a highway. It was in 00:04:39.990 --> 00:04:43.009 small railroad switchers. The little yard engines. 00:04:43.089 --> 00:04:45.449 Why there? Because a railroad yard is a brutal 00:04:45.449 --> 00:04:47.529 environment for an engine. They're under constant 00:04:47.529 --> 00:04:50.129 extreme load. All day long, it's start, stop, 00:04:50.250 --> 00:04:52.610 high torque, moving incredible weights at low 00:04:52.610 --> 00:04:54.949 speeds. It's the ultimate stress test. Exactly. 00:04:55.170 --> 00:04:57.829 The reliability and torque of the Model H proved 00:04:57.829 --> 00:04:59.970 it was superior in that one punishing niche. 00:05:00.389 --> 00:05:02.810 And once they conquered the railroad yard, the 00:05:02.810 --> 00:05:05.110 rest of the market finally accepted that this 00:05:05.110 --> 00:05:07.480 Cummins diesel was ready for the heavy -duty 00:05:07.480 --> 00:05:10.379 road. That credibility, forged in the middle 00:05:10.379 --> 00:05:12.660 of the Great Depression no less, it positioned 00:05:12.660 --> 00:05:15.139 them perfectly for what was coming next. The 00:05:15.139 --> 00:05:19.819 post -war boom, the 1950s, all that massive infrastructure 00:05:19.819 --> 00:05:22.560 spending, the creation of the interstate highway 00:05:22.560 --> 00:05:26.759 system, that was their golden age. And the Cummins 00:05:26.759 --> 00:05:29.300 N -series engines became the industry standard. 00:05:29.660 --> 00:05:31.500 They were in everything, construction equipment, 00:05:31.839 --> 00:05:34.660 long -haul trucking. The sources quantify it 00:05:34.660 --> 00:05:38.540 perfectly. From 1952 to 1959, just a seven -year 00:05:38.540 --> 00:05:40.819 stretch. What was it? Cummins engines were in 00:05:40.819 --> 00:05:42.740 more than half of the entire heavy -duty truck 00:05:42.740 --> 00:05:44.860 market. More than half? That's not a market position. 00:05:45.000 --> 00:05:47.040 That's market control. And they were already 00:05:47.040 --> 00:05:49.740 thinking globally. While a lot of American companies 00:05:49.740 --> 00:05:52.360 were just focused on the domestic boom, Cummins 00:05:52.360 --> 00:05:54.279 opened an assembly plant in Shotts, Scotland. 00:05:54.720 --> 00:05:57.180 in the 1960s. That plan eventually closed, but 00:05:57.180 --> 00:05:59.420 it showed their intent early on. It did. And 00:05:59.420 --> 00:06:02.759 by 2013, they had operations in 197 countries. 00:06:03.199 --> 00:06:05.819 So that global mindset was part of their DNA 00:06:05.819 --> 00:06:08.019 from the very beginning. Okay, so that's the 00:06:08.019 --> 00:06:11.439 foundation. Persistence, smart marketing, and 00:06:11.439 --> 00:06:14.199 conquering the post -war road. But to understand 00:06:14.199 --> 00:06:17.720 the $34 billion operation today, we have to look 00:06:17.720 --> 00:06:19.819 past the engine block. You have to look at the 00:06:19.819 --> 00:06:22.910 modern company. Let's move to part two. The five 00:06:22.910 --> 00:06:25.410 business pillars of Cummins. This is critical. 00:06:25.790 --> 00:06:28.509 Because if you think of Cummins as just an engine 00:06:28.509 --> 00:06:31.310 company, you're missing the whole picture. It's 00:06:31.310 --> 00:06:33.170 like calling a skyscraper just a foundation. 00:06:33.509 --> 00:06:36.009 It's a full -stack power ecosystem. Exactly. 00:06:36.250 --> 00:06:38.470 And if you understand these five units, you understand 00:06:38.470 --> 00:06:40.490 how they make money and how they manage risk 00:06:40.490 --> 00:06:43.970 in this rapidly changing landscape. So pillar 00:06:43.970 --> 00:06:46.750 one has to be the core, the engine business itself. 00:06:47.189 --> 00:06:50.430 Section 2 .1, the Cummins engine business. This 00:06:50.430 --> 00:06:52.829 is the historical heartbeat, the source of that 00:06:52.829 --> 00:06:55.009 famous rumble. And it covers pretty much every 00:06:55.009 --> 00:06:57.089 application you can imagine. Heavy duty trucks, 00:06:57.310 --> 00:06:59.850 buses, RVs, and all those industrial sectors. 00:07:00.069 --> 00:07:03.949 Mining, rail, marine, defense, you name it. But 00:07:03.949 --> 00:07:05.370 for a lot of our listeners, their most direct 00:07:05.370 --> 00:07:08.029 exposure to a Cummins engine is through one very 00:07:08.029 --> 00:07:10.480 specific, very legendary partnership. The Dodge 00:07:10.480 --> 00:07:13.740 Ram. The Dodge Ram heavy duty pickups. Starting 00:07:13.740 --> 00:07:17.399 in 1988, they put the 5 .9 liter i6 engine into 00:07:17.399 --> 00:07:20.100 those trucks. And that move just fundamentally 00:07:20.100 --> 00:07:23.199 redefined the heavy duty pickup market. It created 00:07:23.199 --> 00:07:25.959 this fiercely loyal following of owners who wanted 00:07:25.959 --> 00:07:28.319 that durability, that immense torque from a diesel. 00:07:28.519 --> 00:07:31.300 It gave Cummins a consumer visibility they've 00:07:31.300 --> 00:07:33.839 never had before. And that engine has had incredible 00:07:33.839 --> 00:07:37.139 staying power. It evolved into the larger 6 .7 00:07:37.139 --> 00:07:39.420 liter version that's been in the Ram since 2000. 00:07:39.439 --> 00:07:42.379 It's famous for its longevity. But even that 00:07:42.379 --> 00:07:45.360 iconic engine ran into some pretty massive manufacturing 00:07:45.360 --> 00:07:48.000 challenges. Right. We talked about complexity 00:07:48.000 --> 00:07:50.790 being a risk. And the 53 block controversy is 00:07:50.790 --> 00:07:53.170 a perfect example. A class action suit was filed 00:07:53.170 --> 00:07:55.889 back in 2008. And this was about the Cummins 00:07:55.889 --> 00:07:59.750 ISB 5 .9 liter diesel in Dodge Rams from about 00:07:59.750 --> 00:08:02.910 1998 to 2001. That's right. The allegation was 00:08:02.910 --> 00:08:04.870 that a specific casting pattern on the engine 00:08:04.870 --> 00:08:07.910 block marked with the number 53 was structurally 00:08:07.910 --> 00:08:10.230 weak. Prone to cracking. Prone to cracking, which 00:08:10.230 --> 00:08:11.910 would create a coolant leak. And if you don't 00:08:11.910 --> 00:08:14.050 catch that, it could lead to catastrophic engine 00:08:14.050 --> 00:08:16.240 failure. So how did that end? The case was settled 00:08:16.240 --> 00:08:19.160 and qualified owners got a $500 settlement for 00:08:19.160 --> 00:08:22.779 repairs. But it just shows you how a tiny technical 00:08:22.779 --> 00:08:26.500 detail in manufacturing can cascade into this 00:08:26.500 --> 00:08:30.139 huge legal and financial problem involving hundreds 00:08:30.139 --> 00:08:32.700 of thousands of vehicles. The challenge of high 00:08:32.700 --> 00:08:35.440 volume manufacturing. But before we leave the 00:08:35.440 --> 00:08:37.779 core engine business, it's worth noting they 00:08:37.779 --> 00:08:40.259 didn't just stick to diesel even within internal 00:08:40.259 --> 00:08:43.539 combustion. No, they've been proactive. Back 00:08:43.539 --> 00:08:45.960 in 2013, they partnered with a company called 00:08:45.960 --> 00:08:48.799 Westport Innovations to ship large natural gas 00:08:48.799 --> 00:08:51.539 engines to U .S. truck makers. So it wasn't a 00:08:51.539 --> 00:08:54.259 new engine design, really, but a new fuel strategy. 00:08:54.500 --> 00:08:57.039 Exactly. It coincided with the expansion of the 00:08:57.039 --> 00:08:59.500 natural gas distribution network. It shows they're 00:08:59.500 --> 00:09:01.460 always thinking about how power generation has 00:09:01.460 --> 00:09:03.460 to match the available infrastructure. And their 00:09:03.460 --> 00:09:06.120 R &D is global, too. There's a big technical 00:09:06.120 --> 00:09:08.419 center in Darlington, England. Yeah, that one's 00:09:08.419 --> 00:09:10.440 focused specifically on products for the European, 00:09:10.620 --> 00:09:12.960 Middle Eastern, and Asian markets. They don't 00:09:12.960 --> 00:09:14.460 just build one engine and push it everywhere. 00:09:14.580 --> 00:09:16.240 Right, they have to customize for all the different 00:09:16.240 --> 00:09:19.080 emission standards. Which vary wildly. And we 00:09:19.080 --> 00:09:21.340 should also just briefly mention the really specialized 00:09:21.340 --> 00:09:24.299 stuff here, like the military -specific V903. 00:09:24.519 --> 00:09:28.220 A 14 .8 liter V8. Yeah, which powers things like 00:09:28.220 --> 00:09:30.879 the Bradley fighting vehicles. It's just a good 00:09:30.879 --> 00:09:33.220 reminder that their engine business goes way 00:09:33.220 --> 00:09:35.940 deeper than just highway trucks. Okay, so that's 00:09:35.940 --> 00:09:38.480 the core. What about pillar two, the components 00:09:38.480 --> 00:09:42.559 business? Section 2 .2. If the engine is the 00:09:42.559 --> 00:09:45.080 muscular core, the components business is the 00:09:45.080 --> 00:09:48.179 brain and the lungs. It provides all the hardware 00:09:48.179 --> 00:09:50.740 and software to make sure that core runs efficiently 00:09:50.740 --> 00:09:53.100 and compliantly. This is all the support systems? 00:09:53.360 --> 00:09:55.620 All of it. There are five key areas. Emission 00:09:55.620 --> 00:09:58.000 solutions, filtration under the Fleet Guard brand, 00:09:58.320 --> 00:10:01.279 fuel systems, turbo technologies, and electronics. 00:10:01.740 --> 00:10:03.659 Let's focus on a couple of those. The tobos first. 00:10:04.120 --> 00:10:06.120 That's the Turbo Technologies unit. It operates 00:10:06.120 --> 00:10:08.779 under that very famous brand name, Holset. Right. 00:10:09.039 --> 00:10:11.840 They specialize in turbochargers, but specifically 00:10:11.840 --> 00:10:14.519 for diesel engines above three liters. These 00:10:14.519 --> 00:10:17.220 aren't just aftermarket add -ons. They're incredibly 00:10:17.220 --> 00:10:19.960 complex, precision devices you need to meet power 00:10:19.960 --> 00:10:22.100 and efficiency targets. And the second critical 00:10:22.100 --> 00:10:25.200 part, the digital brain. The electronics unit. 00:10:25.440 --> 00:10:27.700 This is where the real intelligence is. They 00:10:27.700 --> 00:10:30.159 design the engine control units, the ECUs, and 00:10:30.159 --> 00:10:32.919 all the sensors. And the ECU manages everything. 00:10:33.529 --> 00:10:37.350 Everything. Fuel injection, airflow, and most 00:10:37.350 --> 00:10:39.350 importantly, the complex algorithms that govern 00:10:39.350 --> 00:10:42.129 emissions control. And as we'll get into later, 00:10:42.350 --> 00:10:46.149 that ECU software is both the source of their 00:10:46.149 --> 00:10:48.730 modern performance and the source of their biggest 00:10:48.730 --> 00:10:51.350 regulatory risk. And Fleet Guard just keeps everything 00:10:51.350 --> 00:10:55.190 clean. A vital job. Air, fuel, hydraulic, lube 00:10:55.190 --> 00:10:57.870 filtration. In mining or construction, those 00:10:57.870 --> 00:10:59.750 engines are in the absolute worst environments. 00:10:59.830 --> 00:11:02.519 If you don't keep the fluids and air clean, the 00:11:02.519 --> 00:11:05.179 engine just dies. Simple as that. Okay, on to 00:11:05.179 --> 00:11:08.039 Pillar 3, Cummins Power Systems. This is their 00:11:08.039 --> 00:11:10.519 off -grid power business. Section 2 .3, yeah. 00:11:10.659 --> 00:11:13.200 This traces its lineage back to the Cummins Onan 00:11:13.200 --> 00:11:15.759 Corporation. It's the segment that provides power 00:11:15.759 --> 00:11:17.960 when the road ends or the grid goes down. Backup 00:11:17.960 --> 00:11:20.120 power specialists. Right, and their product line 00:11:20.120 --> 00:11:22.500 is huge. Everything from small consumer generators 00:11:22.500 --> 00:11:25.740 to huge commercial power systems, alternators, 00:11:25.879 --> 00:11:28.169 automatic transfer switches. It's interesting 00:11:28.169 --> 00:11:30.610 they're also into paralleling systems, which 00:11:30.610 --> 00:11:33.190 let multiple generators work together. That's 00:11:33.190 --> 00:11:35.549 the move toward high -capacity stationary power. 00:11:36.070 --> 00:11:38.750 And speaking of shifts, it's really important 00:11:38.750 --> 00:11:42.450 to note that in August 2017, they sold off all 00:11:42.450 --> 00:11:45.470 their mobile power generation assets. All of 00:11:45.470 --> 00:11:48.710 them? To who? To United Rentals. Why would they 00:11:48.710 --> 00:11:51.330 sell off a business that seems so core to their 00:11:51.330 --> 00:11:54.350 history? It was a strategic move, a streamlining 00:11:54.350 --> 00:11:57.769 effort. By selling the mobile assets, which require 00:11:57.769 --> 00:12:00.649 a huge service and rental infrastructure, they 00:12:00.649 --> 00:12:02.710 let a specialist like United Rentals handle that, 00:12:02.830 --> 00:12:05.389 while Cummins could focus its own resources on 00:12:05.389 --> 00:12:08.090 the stationary, high -horsepower industrial systems. 00:12:08.590 --> 00:12:11.090 Optimizing for higher -margin complex systems 00:12:11.090 --> 00:12:14.490 makes sense. Exactly. Pillar 4. The distribution 00:12:14.490 --> 00:12:17.450 business. This sounds administrative, but you 00:12:17.450 --> 00:12:19.549 can argue it's the most important part for keeping 00:12:19.549 --> 00:12:22.669 customers happy. Section 2 .4. You're right. 00:12:22.710 --> 00:12:24.570 If a mining truck breaks down in the middle of 00:12:24.570 --> 00:12:27.370 nowhere in Chile or a generator fails at a hospital 00:12:27.370 --> 00:12:30.029 in India, this is the unit that saves the day. 00:12:30.190 --> 00:12:32.570 It's the Global Service and Parts Network. It's 00:12:32.570 --> 00:12:35.570 their global nervous system. They have 17 company 00:12:35.570 --> 00:12:38.330 -owned distributors, 10 joint ventures, covering 00:12:38.330 --> 00:12:41.870 90 countries with 234 locations. That's a massive 00:12:41.870 --> 00:12:44.289 footprint. It has to be. When you're dealing 00:12:44.289 --> 00:12:46.919 with mission -critical assets. Defense vehicles, 00:12:47.139 --> 00:12:49.820 marine vessels, oil rigs, uptime is everything. 00:12:50.179 --> 00:12:53.100 This network ensures that a Cummins part or an 00:12:53.100 --> 00:12:56.360 expert technician is never too far away. That's 00:12:56.360 --> 00:12:58.399 a huge competitive advantage. OK, that brings 00:12:58.399 --> 00:13:00.899 us to the fifth and final pillar, the most forward 00:13:00.899 --> 00:13:04.000 looking high stakes division of them all. Accelera. 00:13:04.159 --> 00:13:07.000 Session 2 .5, Accelera by Cummins. This is their 00:13:07.000 --> 00:13:09.779 explicit answer to the climate and regulatory 00:13:09.779 --> 00:13:12.179 challenges of the 21st century. This is their 00:13:12.179 --> 00:13:14.279 future. This is the future of Cummins. It was 00:13:14.279 --> 00:13:17.220 rebranded from the new power unit in March 2023. 00:13:17.639 --> 00:13:19.919 And this isn't some cautious little side project. 00:13:20.059 --> 00:13:23.480 This is a comprehensive, dedicated focus on zero 00:13:23.480 --> 00:13:25.740 emissions power. They're basically trying to 00:13:25.740 --> 00:13:28.379 replicate their success in diesel across three 00:13:28.379 --> 00:13:31.080 or four new energy platforms all at once. And 00:13:31.080 --> 00:13:33.139 what makes their approach so aggressive? They're 00:13:33.139 --> 00:13:35.620 betting on the whole spectrum. Accelera makes 00:13:35.620 --> 00:13:38.399 hydrogen fuel cells, which are great for long 00:13:38.399 --> 00:13:40.440 -haul trucks where battery weight is a problem. 00:13:40.799 --> 00:13:43.639 They also make batteries, e -axles, and traction 00:13:43.639 --> 00:13:46.720 systems for EVs. But the crucial piece, the real 00:13:46.720 --> 00:13:49.600 foundational commitment, is the electrolyzers. 00:13:49.840 --> 00:13:52.460 That's the key. Electrolyzers are the machines 00:13:52.460 --> 00:13:55.299 you use to produce clean hydrogen fuel from water. 00:13:55.690 --> 00:13:57.870 So they aren't just selling the components for 00:13:57.870 --> 00:14:00.350 the vehicles, they're investing in the infrastructure 00:14:00.350 --> 00:14:02.990 required to actually generate the fuel for the 00:14:02.990 --> 00:14:05.389 new hydrogen economy. It shows they understand 00:14:05.389 --> 00:14:07.990 the whole supply chain problem, just like Klessie 00:14:07.990 --> 00:14:10.389 Cummins had to solve the diesel reliability problem 00:14:10.389 --> 00:14:13.769 100 years ago. And this unit, Accelera, is the 00:14:13.769 --> 00:14:15.870 financial counterweight to the massive regulatory 00:14:15.870 --> 00:14:18.289 risks we're going to talk about in Part 5. That 00:14:18.289 --> 00:14:20.980 sets the stage perfectly. Because even as they're 00:14:20.980 --> 00:14:23.519 racing into the future with Accelera, they are 00:14:23.519 --> 00:14:25.539 still consolidating their traditional power. 00:14:25.960 --> 00:14:28.799 Let's get into that in part three. Specializations, 00:14:28.860 --> 00:14:31.799 subsidiaries, and their global footprint. Right. 00:14:31.860 --> 00:14:33.759 When you look at their acquisitions, you see 00:14:33.759 --> 00:14:37.759 this relentless focus on securing strategic IP 00:14:37.759 --> 00:14:40.740 and manufacturing so they control every critical 00:14:40.740 --> 00:14:42.700 component of their engines. Let's start with 00:14:42.700 --> 00:14:45.519 Holset, the turbocharger brand. Holset Engineering 00:14:45.519 --> 00:14:48.230 was originally a British company. Cummins saw 00:14:48.230 --> 00:14:50.190 how important it was to control forced induction 00:14:50.190 --> 00:14:53.230 technology, so they bought them way back in 1973. 00:14:53.690 --> 00:14:55.649 And they kept the brand name. They did. They 00:14:55.649 --> 00:14:57.789 renamed the division Cummins Turbo Technologies 00:14:57.789 --> 00:15:01.230 in 2006, but they wisely kept the Holset brand 00:15:01.230 --> 00:15:03.809 for the turbos themselves. That name recognition 00:15:03.809 --> 00:15:06.490 is priceless in the heavy -duty world. And their 00:15:06.490 --> 00:15:08.649 manufacturing for Holset is global, just like 00:15:08.649 --> 00:15:11.230 the rest of the company. Centralized IP, but 00:15:11.230 --> 00:15:14.370 decentralized manufacturing. China, India, Brazil, 00:15:14.610 --> 00:15:17.590 the UK. But maybe the most fascinating story 00:15:17.590 --> 00:15:20.210 of reacquisition involves the engine brake. The 00:15:20.210 --> 00:15:23.110 famous Jake brake. Exactly. Klessie Cummins himself 00:15:23.110 --> 00:15:25.629 invented the engine brake in the late 1950s. 00:15:25.690 --> 00:15:28.250 But he sold the technology to Jacobs Chuck in 00:15:28.250 --> 00:15:30.909 1961. And Jacobs created a whole division to 00:15:30.909 --> 00:15:33.649 make it. Yep. Jacobs Vehicle Systems. And then 00:15:33.649 --> 00:15:36.809 in 2022, Cummins bought that very same company. 00:15:36.990 --> 00:15:39.090 So they bought back their founder's invention. 00:15:39.509 --> 00:15:42.210 That's an incredible full circle moment for IP 00:15:42.210 --> 00:15:45.110 strategy. It's a huge move. They still use the 00:15:45.110 --> 00:15:47.549 Jacobs name for the brake products, but that 00:15:47.549 --> 00:15:49.750 division now designs much more advanced tech, 00:15:49.870 --> 00:15:52.509 specifically variable valve actuation systems. 00:15:52.929 --> 00:15:55.830 Okay, let's quickly define VVA for the listener. 00:15:55.950 --> 00:15:58.669 VVA, variable valve actuation. It's critical 00:15:58.669 --> 00:16:01.110 for modern engines. It's technology that lets 00:16:01.110 --> 00:16:03.210 the engine precisely control when the intake 00:16:03.210 --> 00:16:05.830 and exhaust valves open and close. What you need 00:16:05.830 --> 00:16:09.429 for. What? For optimizing power, for engine braking, 00:16:09.649 --> 00:16:12.490 and most importantly... for enabling the complex 00:16:12.490 --> 00:16:14.990 emissions control strategies required to meet 00:16:14.990 --> 00:16:18.330 today's strict standards. By owning the VVA tech, 00:16:18.549 --> 00:16:21.070 Cummins controls the heart of a modern, compliant 00:16:21.070 --> 00:16:23.809 diesel engine. And quickly, the Onan rebranding 00:16:23.809 --> 00:16:26.590 shows a desire for a single, unified brand. Yeah, 00:16:26.669 --> 00:16:30.049 they bought Onan back in 92. In 2017, they decided 00:16:30.049 --> 00:16:32.250 to consolidate their retired names like Cummins 00:16:32.250 --> 00:16:34.830 Power Generation. The Onan name was repositioned 00:16:34.830 --> 00:16:37.009 just as a product line. the mobile generators 00:16:37.009 --> 00:16:39.850 for the RV market, all under the single Cummins 00:16:39.850 --> 00:16:42.190 brand. It's about making the promise of Cummins 00:16:42.190 --> 00:16:45.190 dependability consistent everywhere. Now, this 00:16:45.190 --> 00:16:47.750 huge investment in Accelera and Green Power, 00:16:47.970 --> 00:16:51.149 it hasn't gone unnoticed politically. Not at 00:16:51.149 --> 00:16:54.330 all. The visit by President Joe Biden to the 00:16:54.330 --> 00:16:56.649 Cummins plant in Fridley, Minnesota in April 00:16:56.649 --> 00:17:00.429 2023 was a very strong signal. And that visit 00:17:00.429 --> 00:17:03.370 was part of his investing in America tour. What 00:17:03.370 --> 00:17:06.170 was the focus? It was centered on Cummins announcing 00:17:06.170 --> 00:17:09.630 a massive $1 billion initiative to accelerate 00:17:09.630 --> 00:17:12.529 clean energy tech production. The friendly facility 00:17:12.529 --> 00:17:14.750 was highlighted specifically for producing those 00:17:14.750 --> 00:17:17.369 electrolyzers for hydrogen cells. So the government 00:17:17.369 --> 00:17:20.170 is seeing Cummins, a traditional diesel giant, 00:17:20.269 --> 00:17:23.069 as a key domestic partner in the whole transition 00:17:23.069 --> 00:17:25.769 to a hydrogen infrastructure. Exactly. It's proof 00:17:25.769 --> 00:17:27.829 that the solar investment isn't some marginal 00:17:27.829 --> 00:17:30.309 side project. It's a serious capital intensive 00:17:30.309 --> 00:17:32.730 move to secure U .S. manufacturing leadership 00:17:32.730 --> 00:17:35.569 in the clean energy space. OK, let's talk about 00:17:35.569 --> 00:17:37.910 their global hubs, specifically China and India, 00:17:38.029 --> 00:17:40.089 because China is where the sheer volume of their 00:17:40.089 --> 00:17:42.430 engine business is. And that has huge strategic 00:17:42.430 --> 00:17:45.650 implications. China is fundamental to their current 00:17:45.650 --> 00:17:48.700 success and their future engine design. They 00:17:48.700 --> 00:17:51.039 have several successful joint ventures, but the 00:17:51.039 --> 00:17:53.559 most significant is the Beijing Foton Cummins 00:17:53.559 --> 00:17:55.680 engine company. And that Foton joint venture 00:17:55.680 --> 00:17:57.920 is responsible for the engine platform that is 00:17:57.920 --> 00:18:01.140 now the backbone of their entire global line. 00:18:01.380 --> 00:18:03.900 The ISGX -12 engine platform, that's the core 00:18:03.900 --> 00:18:06.380 insight here, was developed by that joint venture 00:18:06.380 --> 00:18:09.359 in the mid -2010s, and it's a masterpiece of 00:18:09.359 --> 00:18:11.430 high -volume engineering. What kind of volume 00:18:11.430 --> 00:18:13.529 are we talking? The sources say production in 00:18:13.529 --> 00:18:17.630 China has surpassed an astonishing 240 ,000 units 00:18:17.630 --> 00:18:20.329 per year. It is now the single highest volume 00:18:20.329 --> 00:18:22.769 heavy -duty engine in the entire global Cummings 00:18:22.769 --> 00:18:25.990 lineup. 240 ,000. And here's the crucial sentence 00:18:25.990 --> 00:18:29.029 from the sources. The ISGX -12 platform is the 00:18:29.029 --> 00:18:31.910 foundation for all future Cummins engine platforms. 00:18:32.069 --> 00:18:34.990 Let that sink in. It means no matter where a 00:18:34.990 --> 00:18:37.009 new Cummins engine is designed, the architecture, 00:18:37.309 --> 00:18:40.029 the design lessons, the manufacturing cost efficiencies, 00:18:40.150 --> 00:18:42.269 they all come from their Chinese joint venture. 00:18:42.390 --> 00:18:44.609 The center of gravity for their highest volume 00:18:44.609 --> 00:18:47.759 techs is in China. That's a major strategic reality. 00:18:47.960 --> 00:18:50.039 And you contrast that high -volume manufacturing 00:18:50.039 --> 00:18:53.019 with their presence in India, which also has 00:18:53.019 --> 00:18:56.079 huge scale but focuses much more on R &D and 00:18:56.079 --> 00:18:58.619 technical talent. Cummins India is a massive 00:18:58.619 --> 00:19:02.099 operation. By 2013, it was already doing $1 .5 00:19:02.099 --> 00:19:05.500 billion in revenue with 20 factories. But the 00:19:05.500 --> 00:19:07.940 investment in human capital is what really stands 00:19:07.940 --> 00:19:11.339 out. The technical center in Pune. Yes. They 00:19:11.339 --> 00:19:13.160 established the Cummins Research and Technology 00:19:13.160 --> 00:19:17.460 Center in 2003, and that Toon Center, CTCI, now 00:19:17.460 --> 00:19:21.119 houses over 2 ,500 engineers. This isn't a back 00:19:21.119 --> 00:19:24.200 office, it's a major globally integrated R &D 00:19:24.200 --> 00:19:26.380 hub. And as a sign of their long -term commitment 00:19:26.380 --> 00:19:28.180 there, there's that detail about the Women's 00:19:28.180 --> 00:19:30.680 Engineering College. It's remarkable. The MKSS 00:19:30.680 --> 00:19:33.200 Cummins College of Engineering for Women in Pune, 00:19:33.339 --> 00:19:35.720 establishing a dedicated women -only engineering 00:19:35.720 --> 00:19:38.450 college, shows this. deep institutional investment 00:19:38.450 --> 00:19:40.829 in fostering local talent, ensuring they have 00:19:40.829 --> 00:19:43.809 an R &D pipeline for decades. It's a very sophisticated 00:19:43.809 --> 00:19:46.750 global strategy then. Control the core IP like 00:19:46.750 --> 00:19:49.250 Holset and Jacobs, secure the future fuel tech 00:19:49.250 --> 00:19:51.450 with Accelera, and leverage the manufacturing 00:19:51.450 --> 00:19:54.069 scale of China and the R &D talent of India. 00:19:54.289 --> 00:19:56.309 That's the playbook. Okay, let's quickly run 00:19:56.309 --> 00:19:58.309 through the engine catalog in part four, not 00:19:58.309 --> 00:20:00.589 as a list, but to see how they've strategically 00:20:00.589 --> 00:20:03.529 covered every single market segment. From light 00:20:03.529 --> 00:20:05.980 duty delivery trucks. all the way to mountain 00:20:05.980 --> 00:20:08.119 -moving mining equipment. Let's start with the 00:20:08.119 --> 00:20:11.019 IS, or Interact series. This is their on -highway 00:20:11.019 --> 00:20:14.880 power. The trucks, buses, RVs. And the strategic 00:20:14.880 --> 00:20:17.839 insight here is how deeply integrated this IS 00:20:17.839 --> 00:20:20.599 family is across the whole industry. Take the 00:20:20.599 --> 00:20:24.599 ISB 6 .7 liter I6, one of the Ram trucks and 00:20:24.599 --> 00:20:27.539 school buses. It's such a proven design that 00:20:27.539 --> 00:20:29.819 other major manufacturers just buy it and rebrand 00:20:29.819 --> 00:20:32.200 it. like who the sources confirm it's sold to 00:20:32.200 --> 00:20:36.160 paccar and branded as the px6 or px7 and Tuscania, 00:20:36.359 --> 00:20:38.480 where it's called the DC -07. So the heart of 00:20:38.480 --> 00:20:40.480 trucks made by their competitors often has a 00:20:40.480 --> 00:20:42.839 Cummins design inside. That's the ultimate measure 00:20:42.839 --> 00:20:45.460 of market dominance. It really is. And they offer 00:20:45.460 --> 00:20:47.480 alternative fuels in this family, too, with the 00:20:47.480 --> 00:20:50.880 ISLG and ISXG natural gas engines. Right. So 00:20:50.880 --> 00:20:54.099 now if the IS family is the road, the QS or Quantum 00:20:54.099 --> 00:20:56.940 Series is everything off -road. Section 4 .2. 00:20:57.019 --> 00:21:00.220 Exactly. Whale, marine, construction, mining, 00:21:00.400 --> 00:21:03.740 extreme power generation. This is where you see 00:21:03.740 --> 00:21:05.619 the immense scale. of their engineering. These 00:21:05.619 --> 00:21:08.079 engines are designed to literally move mountains. 00:21:08.339 --> 00:21:10.579 They go way beyond the 15 liter limit of highway 00:21:10.579 --> 00:21:12.599 trucks. We're talking about the QSD 30 liter 00:21:12.599 --> 00:21:17.299 V12, the QSK 78 liter V18, but the true definition 00:21:17.299 --> 00:21:20.160 of extreme power is their largest offering, which 00:21:20.160 --> 00:21:24.059 is the QSK 95 liter V16. To give you some perspective, 00:21:24.279 --> 00:21:26.319 this engine is taller than an average person 00:21:26.319 --> 00:21:28.619 and weighs more than several cars. And it's used 00:21:28.619 --> 00:21:30.900 in what? Ultra class mining haul trucks that 00:21:30.900 --> 00:21:33.480 carry hundreds of tons of rock. It just proves 00:21:33.480 --> 00:21:35.319 that Cummins Engineering can deliver power at 00:21:35.319 --> 00:21:37.819 the absolute apex of industrial demand. And looking 00:21:37.819 --> 00:21:40.220 forward, the evolution of the on -highway IS 00:21:40.220 --> 00:21:42.839 family is the X -Series. Correct, the X -12 and 00:21:42.839 --> 00:21:45.180 the X -15. These represent the latest optimization 00:21:45.180 --> 00:21:47.819 of their heavy -duty architecture, building on 00:21:47.819 --> 00:21:50.259 that foundation we identified in China. Cleaner, 00:21:50.259 --> 00:21:52.660 more efficient, squeezing every last drop of 00:21:52.660 --> 00:21:54.519 performance out of diesel tech. And the final 00:21:54.519 --> 00:21:57.589 symbolic piece of the pivot. The concept vehicles. 00:21:58.009 --> 00:22:00.470 The Cummins EOS, an all -electric conventional 00:22:00.470 --> 00:22:03.710 truck concept. The EOS is crucial because it 00:22:03.710 --> 00:22:05.750 shows they can transfer all their knowledge of 00:22:05.750 --> 00:22:08.829 integration, cooling, durability from diesel 00:22:08.829 --> 00:22:11.430 into the electric world. It's a message to the 00:22:11.430 --> 00:22:13.910 market. Exactly. The brand is telegraphing that 00:22:13.910 --> 00:22:16.390 even when the power source changes, the promise 00:22:16.390 --> 00:22:19.400 of heavy -duty reliability remains. Okay. We've 00:22:19.400 --> 00:22:21.460 built the whole picture, the history, the five 00:22:21.460 --> 00:22:24.259 pillars, the global footprint, but this entire 00:22:24.259 --> 00:22:26.279 narrative is being driven by the enormous financial 00:22:26.279 --> 00:22:29.960 pressures we hinted at. It is. So, part five. 00:22:30.299 --> 00:22:32.660 Let's address the critical risk driving this 00:22:32.660 --> 00:22:35.420 whole zero emissions pivot, the high cost of 00:22:35.420 --> 00:22:37.940 emissions and regulatory failure. This section 00:22:37.940 --> 00:22:41.019 reveals the vulnerability of the entire $34 billion 00:22:41.019 --> 00:22:44.279 structure. Compliance is incredibly complex. 00:22:44.579 --> 00:22:47.599 And failure, especially repeated failure, is 00:22:47.599 --> 00:22:50.539 ruinous. We have to start back in 1998, a landmark 00:22:50.539 --> 00:22:53.019 moment that really shook the entire diesel industry. 00:22:53.259 --> 00:22:56.980 It did. The EPA leveled fines of $83 .4 million 00:22:56.980 --> 00:23:00.000 against Cummins and six other diesel manufacturers. 00:23:00.339 --> 00:23:02.339 At the time, that was the biggest fine ever. 00:23:02.579 --> 00:23:04.660 But the way they cheated is what's so shocking. 00:23:04.880 --> 00:23:07.099 They basically had a cheat code built into the 00:23:07.099 --> 00:23:09.339 engine's digital brain. That's the simplest way 00:23:09.339 --> 00:23:12.670 to put it, the defeat device. The EPA found that 00:23:12.670 --> 00:23:15.670 manufacturers were using sophisticated ECU software 00:23:15.670 --> 00:23:19.230 that was programmed to recognize the exact parameters 00:23:19.230 --> 00:23:22.569 of the 20 -minute lab test for Clean Air Act 00:23:22.569 --> 00:23:25.529 compliance. So during that test, the pollution 00:23:25.529 --> 00:23:28.269 controls would engage fully. Making the engine 00:23:28.269 --> 00:23:30.410 look perfectly clean. It passed the test every 00:23:30.410 --> 00:23:32.309 time. But what happened the moment that truck 00:23:32.309 --> 00:23:34.329 left the lab and started driving on a normal 00:23:34.329 --> 00:23:37.259 highway? The software... quietly, deliberately 00:23:37.259 --> 00:23:39.819 disabled the full emissions controls. The result 00:23:39.819 --> 00:23:43.759 was trucks emitting no LOX, nitrogen oxides, 00:23:43.819 --> 00:23:46.299 at up to three times the legal limit. And non 00:23:46.299 --> 00:23:48.579 -X is a serious pollutant. A major contributor 00:23:48.579 --> 00:23:51.519 to smog and respiratory problems. The fallout 00:23:51.519 --> 00:23:54.059 was immense. The manufacturers were mandated 00:23:54.059 --> 00:23:56.619 to spend more than a billion dollars to fix the 00:23:56.619 --> 00:23:59.240 problem. Over a billion dollars. A quarter century 00:23:59.240 --> 00:24:01.259 ago. You would think a lesson that expensive 00:24:01.259 --> 00:24:03.779 would lead to permanent changes. You would think. 00:24:04.039 --> 00:24:06.019 But then we have to address... the record setting 00:24:06.019 --> 00:24:09.279 Fine that hit them just recently. The 2023 Fine 00:24:09.279 --> 00:24:13.369 Redefined Massive. In December 2023, the U .S. 00:24:13.369 --> 00:24:15.630 Justice Department fined Cummins a record -setting 00:24:15.630 --> 00:24:20.970 $1 .675 billion. $1 .675 billion. It just dwarfs 00:24:20.970 --> 00:24:23.630 the 1998 case. And the scope of the deception 00:24:23.630 --> 00:24:26.069 was incredibly broad, spanning a full decade 00:24:26.069 --> 00:24:28.890 of production. From model years 2013 to 2023. 00:24:29.450 --> 00:24:31.769 Right. Cummins was found to have installed defeat 00:24:31.769 --> 00:24:34.390 devices to bypass or disable emissions controls 00:24:34.390 --> 00:24:38.829 on an astounding 960 ,000 -vinconel birch Dodge 00:24:38.829 --> 00:24:41.509 and Stellantis Ram pickup. diesel engines. Nearly 00:24:41.509 --> 00:24:43.690 a million vehicles, the core consumer vehicle 00:24:43.690 --> 00:24:45.410 we talked about. This wasn't a mistake. It's 00:24:45.410 --> 00:24:47.930 just a systemic institutional practice that went 00:24:47.930 --> 00:24:50.630 on for years. What was the total financial hit? 00:24:50.730 --> 00:24:52.430 On top of the record fine, the company agreed 00:24:52.430 --> 00:24:56.130 to pay another $325 million in remedies and recalls. 00:24:56.150 --> 00:24:59.150 That included recalling and fixing 600 ,000 diesel 00:24:59.150 --> 00:25:01.349 Ram trucks. So the total cost is approaching 00:25:01.349 --> 00:25:04.329 $2 billion. That sends an unmistakable signal, 00:25:04.470 --> 00:25:06.250 doesn't it? It says that the regulatory risk 00:25:06.250 --> 00:25:08.529 of staying in the complex high emissions technology 00:25:08.529 --> 00:25:11.569 game has become financially toxic. These two 00:25:11.569 --> 00:25:14.789 major cases separated by 25 years, but connected 00:25:14.789 --> 00:25:17.670 by the same type of defeat device. They aren't 00:25:17.670 --> 00:25:20.130 just news stories. They are the single strongest 00:25:20.130 --> 00:25:23.500 financial argument. for why the Accelera business 00:25:23.500 --> 00:25:26.440 unit has to exist. Absolutely. When the risk 00:25:26.440 --> 00:25:29.960 of diesel compliance reaches $2 billion, the 00:25:29.960 --> 00:25:33.079 transition to zero emissions tech, which inherently 00:25:33.079 --> 00:25:36.279 lacks those complex pollution control systems, 00:25:36.519 --> 00:25:39.079 it stops being a philosophical choice. It becomes 00:25:39.079 --> 00:25:41.220 a critical financial imperative for survival. 00:25:41.460 --> 00:25:43.900 It's about mitigating future regulatory risk. 00:25:44.119 --> 00:25:46.180 And that ties everything together, the global 00:25:46.180 --> 00:25:49.380 scale, the specialization, the technical expertise, 00:25:49.559 --> 00:25:52.420 and these regulatory challenges. all point to 00:25:52.420 --> 00:25:54.660 one overarching corporate strategy. They have 00:25:54.660 --> 00:25:57.359 to transition to survive. Exactly. Okay, so to 00:25:57.359 --> 00:26:00.140 recap, we dove deep into Cummins Inc., tracing 00:26:00.140 --> 00:26:02.539 their story from Klessy Cummins' persistent push 00:26:02.539 --> 00:26:05.000 to commercialize a diesel engine back in 1919, 00:26:05.160 --> 00:26:08.019 all the way to becoming this global power infrastructure 00:26:08.019 --> 00:26:10.420 giant. They dominate heavy transport, military 00:26:10.420 --> 00:26:12.940 power, stationary power, all through strategic 00:26:12.940 --> 00:26:15.640 IP control and the sophisticated global footprint 00:26:15.640 --> 00:26:18.900 that leverages both Indian R &D and Chinese manufacturing 00:26:18.900 --> 00:26:21.630 scale. We've seen, though, that technical dominance 00:26:21.630 --> 00:26:24.710 comes at a shattering cost. The massive repeated 00:26:24.710 --> 00:26:27.549 Clean Air Act violations culminating in that 00:26:27.549 --> 00:26:31.450 record 2023 fine exposed the systemic financial 00:26:31.450 --> 00:26:34.549 risks tied to complex emissions compliance. And 00:26:34.549 --> 00:26:38.250 that risk has catalyzed this rapid multi -billion 00:26:38.250 --> 00:26:41.190 dollar shift into Accelera, positioning Cummins 00:26:41.190 --> 00:26:43.930 to lead in hydrogen, in batteries, and even in 00:26:43.930 --> 00:26:45.769 the production of green hydrogen fuel itself. 00:26:46.069 --> 00:26:48.210 So the company is now effectively split. One 00:26:48.210 --> 00:26:50.730 foot is still firmly planted on that diesel foundation 00:26:50.730 --> 00:26:53.309 built over a century, and the other is sprinting 00:26:53.309 --> 00:26:55.859 toward a zero -emissions future. But here is 00:26:55.859 --> 00:26:58.039 the final provocative thought for you to consider 00:26:58.039 --> 00:27:00.220 as you reflect on all this. We established that 00:27:00.220 --> 00:27:03.319 the massive high volume success of the ISGX -12 00:27:03.319 --> 00:27:05.779 engine platform in China is the technical foundation 00:27:05.779 --> 00:27:08.839 for all future Cummins engine platforms. Given 00:27:08.839 --> 00:27:10.759 the foundation is still diesel based and given 00:27:10.759 --> 00:27:12.740 the existential financial penalties they've incurred 00:27:12.740 --> 00:27:15.900 in the last, how much intense institutional pressure 00:27:15.900 --> 00:27:19.019 is now on the Accelerate unit to succeed, not 00:27:19.019 --> 00:27:20.839 just as another profitable venture, but as the 00:27:20.839 --> 00:27:23.740 only long term pathway to mitigate that regulatory 00:27:23.740 --> 00:27:26.619 risk. completely replace the $2 billion legacy 00:27:26.619 --> 00:27:27.700 of diesel dominance.