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Diesel Engines Not Going Away Just Yet: Cummins approves renewable diesel for all industrial high-horsepower engines

An interview by Yahoo Finance’s Brian Sozzi.

As the EV revolution in the auto industry continues to grow, Cummins CEO Jennifer Rumsey joins Yahoo Finance to discuss the company’s strategy and how it will still be making diesel engines over the next 10 years.

“It’s important to realize that commercial and industrial applications are quite different than passenger cars,” Rumsey says. Customers “need to run equipment that will allow them to be profitable and successfully meet their business requirements,” Rumsey explains. Customers are “really interested in initial cost and total cost of ownership in these technologies,” Rumsey says.

“There’s a range of different applications when you look across different commercial and industrial applications,” such as a bus, pickup, or delivery truck, and they each have “very different power, weight, range, and life requirements that drives different solutions.” “Over the next 10 years… we’re going to continue to grow in the engines that we provide to our customers around the world,” Rumsey says.

I grew up seeing Cummins on the sides of trucks, and I’m very familiar with your engines. And as you mentioned, you’re over 100-year-old company. How do you change mindsets inside of Cummins to position for future then in some respects you can’t quite see yet?

JENNIFER RUMSEY: Well, the history of Cummins is actually all about embracing change and the need to drive change to innovate and grow the company. So we’ve done that for my now more than 20-year career. First with NOx and particulate emissions, and advancing our engines, and growing our components business, which didn’t exist 15 years ago, based on that innovation and that need.

And so we’re doing just that again. We’re embracing this need for change, driving innovation, advocating for change that will enable our customers to continue to be successful. And they serve the heart of our economy, of course, commercial and industrial equipment, while also addressing a very real issue that our planet faces, which is climate change. And doing our part to contribute to positive change there.

We are well familiar with the story on what the automakers are doing. So they’re rolling out electric vehicles. At the same time, they’re coming out with more hybrids. But their cash cow remains gas-powered engines for trucks and vehicles. What is the view inside of Cummins over the next decade? Will you still be making diesel engines?

JENNIFER RUMSEY: Yeah. So the short answer to that question is yes. It’s important to realize that commercial and industrial applications are quite different than passenger cars. First of all, for many of us, you and I, I know included, we buy cars based on emotional buying choices

That’s me. I’m raising my head, Jen. That’s me.

JENNIFER RUMSEY: Right. Me too. Emotional decision on what car I buy. But our customers are making business decisions. They need to run equipment that will allow them to be profitable and successfully meet their business requirements. And so they’re really interested in initial cost and total cost of ownership in these technologies.

Second is there’s a range of different applications. When you look across different commercial and industrial applications from a bus, to a pickup and delivery truck, to a heavy duty long haul truck, a large mining truck, there’s very different power, weight, range, and life requirements that drives different solutions.

So over the next 10 years, for much of that time, we’re going to continue to grow and the engines that we provide to our customers around the world. Our business last year was a total of $28 billion. And that was predominantly our core business for Cummins. This year, our Accelera business will be $350 to $400 million. So still quite small.

Looking forward to 2030, we’ll continue to grow that core business. We project $33 to $35 billion. And the Accelera by Cummins business will become much more significant, in the range of $6 to $13 billion. So through this decade, we’ll continue to see growth across Cummins business.

– Jennifer, is it unrealistic to expect in our lifetimes we’re going to see roads where they’re predominantly going to be Tesla Cybertruck. Not Cybertrucks. The Tesla Semi trucks. Is that in our lifetime, or do we still need a massive improvement in America’s infrastructure?

JENNIFER RUMSEY: Well, there’s a lot of investment required to build out an infrastructure and bring out the cost of these solutions. And it’s important that we start today. So we are focused on some of the applications we’re putting infrastructure in place and making the economics work with incentives make sense, like bus applications. And you see that moving into medium duty.

There we’re starting to see adoption of battery electric powertrains. The reality is for long haul trucks, our view is hydrogen as more likely to be the long term solution, either hydrogen-based engine solutions or hydrogen-fueled fuel cells. Some battery solutions and certain truck applications, and that will take more time. So in my lifetime, I hope that we see many more of those trucks running on the road. But I do think it’s going to be beyond my lifetime before we see that full transition.

– I can’t think of another company that has a better pulse in the economy six months, 12 months from now than Cummins. What do you see in the United States? I think there’s a lot of fears about a slowdown into the second half of this year. What does your backlog say?

JENNIFER RUMSEY: Yeah. So we’re coming out of a period where we had incredibly high demand, and our customers were using their products heavily. Through the 2021-’22 time frame, a lot of supply constraints that prevented us from being able to build to the full industry demand.

So what that’s meant is well we’ve seen a little bit of softening in that economy, we still have very strong backlogs in many of our markets, and there’s other places where we’re seeing infrastructure and other things continue to maintain strength. So we’re coming off of a record quarter for Cummins in Q2. We’re projecting growth across the company for this year but some softening as we get to the back half of this year in certain markets, for example, our heavy duty truck, certain global markets, and even a little bit in the construction market.

– I know you have a big business in China. Is that part of the slowdown you’re seeing?

JENNIFER RUMSEY: Yeah. China has actually been quite slow for the last couple of years. So really at a level lower than we’ve seen in many years as a result of the very stringent COVID lockdown policy and the sluggish economy that we see in China. So that market for us continues to be quite depressed. We’re projecting some slow recovery but really not seeing any dramatic signs of improvement in the market in China.

– And I know it was– I’m sure it’s a proud moment for you and your company when President Biden visited a Cummins facility earlier this year, I believe it was April. As we get into election season and whatever that might entail, what is the next administration, whoever it might be, what do they need to do to make your life easier in the world of manufacturing in this country?

JENNIFER RUMSEY: Yes. So we have made investments in our Fridley plant in part because of some of the incentives that have been in the Inflation Reduction Act that drive adoption of hydrogen and green hydrogen. So that’s one of our businesses within Accelera, is electrolysers for green hydrogen production and very excited about the business opportunity that we have there.

We continue to advocate across both parties and around the world for the legislation and incentives that we think will enable the transition that is necessary to decarbonize our planet. And that’s something that we’re going to continue to do. Those incentives are really critical to create certainty for businesses to invest and enable our customers to adopt these technologies today where they’re still more expensive.

By doing that, that then allows scale up and innovation to occur to occur, and then the technologies will become more cost competitive, the infrastructure will be built out, and the economy can continue to thrive at sustain with these lower carbon solutions into the future.

Cummins Approves Renewable Diesel For All Industrial High-Horsepower Engines

Cummins Inc has announced approval of its entire line of diesel high horsepower engines across all ratings for use with unblended paraffinic fuels (EN15940), often referred to as renewable diesel, including hydrotreated vegetable oil (HVO). It states: “Utilising renewable diesels like HVO are shown to reduce net greenhouse gas (GHG) emission by up to 90% compared to conventional diesel, dependent on the exact feedstock and fuel pathway.”

This approval applies to all high-horsepower (19L-95L, V903, ACE) engines for all applications in use across a variety of industries, such as mining, marine, rail, defense and oil & gas. All industrial engines currently in the field can be fuelled with 100% renewable diesel, or any blend of renewable and traditional diesel, with no engine modifications required. Any renewable diesel used must meet the EN15940 standard, as defined by the European Committee for Standardisation (CEN).

“As we work alongside our customers toward a carbon neutral future, bridge solutions like alternative fuels are critical in decarbonising existing equipment,” said Gary Johansen, Vice President, Power Systems Engineering. “Approving unblended renewable diesel use in all high horsepower engines is one more step on our path of continued innovation to help our industrial customers reduce their carbon footprints while upholding performance and reliability standards.”

Prior to this announcement, Cummins allowed up to 25% renewable diesel for high-horsepower engines for industrial applications, as well as up to 100% renewable diesel for the QSK95 engine for rail. Additionally, Cummins was first to market in fourth quarter of 2021 with the approval of 100% renewable diesel use in standby generator sets used in data centres and other key applications.

Technical evaluations of all high-horsepower engines utilising renewable diesel included emissions cycle, performance, transient, fuel consumption testing as well as field testing. “The trials showed that exhaust emissions output continued to be comparable to engines operating on conventional diesel fuel and within established EPA targets with no changes to engine hardware and software.” The trials also showed that, when compared to conventional diesel, the use of renewable diesel can serve as a drop-in replacement, as well as:

  • Reduce well-to-work greenhouse gas (GHG) emissions up to 90%
  • Reduce tailpipe emissions of particulate matter and smoke up to 50%
  • Experience only ~1-2% power loss
  • Provide no impact to service/maintenance intervals
  • Be stored for longer duration

Cummins high-horsepower engine platforms now approved for unblended HVO include the QSK19, K19, QSK23, QST30, QSK38, K38, QSK45, QSK50, K50, QSK60, QSK78, QSK95, V903 and ACE for all industrial segments. It says operators should contact their local Cummins distributor for more information and the most recent fluids manual.

The company concludes: “This announcement is a strong example of Cummins’ commitment to advance the company’s current technology to achieve industry-leading emissions reductions. Through Planet 2050, Cummins pledges to address climate change, support communities and use resources wisely.”