There is no doubt that the age of the electric vehicle is here. Cummins (NYSE: CMI); one of the world’s best known and most visible makers of diesel engines, is planning to start selling electric powertrains within two years.
“We will be in the market with electrified products in 2019,” Cummins CEO Tom Linebarger said in a June 14, 2017 conference call. “That is a really exciting new area for the company.”
Going electric is not a paradigm shift for Cummins, the company has been building diesel electric hybrids for decades, The Indianapolis Business Journal reported. Instead of developing all electric vehicles, Cummins plans to change the power source of some vehicles from a diesel engine to a battery pack.
There are some good reasons for Cummins to seek new power sources. Movements to ban or restrict diesel are growing in Europe, Mexico, India and Brazil. Widespread anger over the Volkswagen diesel scandal and air pollution in countries like the United Kingdom is creating political pressure against diesel.
Linebarger expects that transit buses, delivery trucks and materials haulers like cement trucks will among the earliest diesel users to go electric. Also likely to go electric will be firetrucks, garbage trucks and maintenance vehicles used by city government.
Cummins engines also expect that over the road trucks, heavy equipment, farm equipment, forklifts and mining machines will become electrified at some point. Machines like that might go electric faster than cars because they stay in one place where they will be easier to recharge.
Large users of such equipment might find it cheaper to generate electricity with a fuel cell or solar panels or buy power from the grid than use diesel. Another advantage is that a piece of equipment operation on a construction site or in a warehouse can simply be plugged in and continue to operate if the charge is low.
Cummins Proves Electric is the Future
Cummins’ announcement is important because it means the company’s engineers think it would be profitable and cost efficient to build electric powered machinery. More importantly the company supplies diesel and drivetrain technology to a wide variety of companies including Fiat Chrysler (NYSE: FCAU); the diesel engines in the popular Dodge Ram trucks are built by Cummins.
Another reason Cummins is going electric is to supply powertrains to companies like Tesla Motors (NASDAQ: TSLA) and Daimler (owner of Freightliner) that are developing electric powered semi-trucks. Cummins can also help companies like Caterpillar (NYSE: CAT) develop electric powered bulldozers and power shovels.
If this trend continues in a few years, electric powered machines might be everywhere. Under those circumstances Elon Musk’s plans to build 100 gigafactories to mass produce lithium batteries will not seem to so crazy. The world made need that many production facilities to supply all the batteries we will need when every diesel is replaced with an electric.