Cummins Inc. (CMI) Presents at BofA Securities 2020 Hydrogen Conference (Transcript)

Cummins Inc. (CMI) Presents at BofA Securities 2020 Hydrogen…

Cummins Inc. (NYSE:CMI) BofA Securities 2020 Hydrogen Conference Call December 16, 2020 3:15 PM ET

Company Participants

Amy Davis – Vice President, and President New Power Business

James Hopkins – Executive Director of Investor Relations

Conference Call Participants

Ross Gilardi – Bank of America

Julien Dumoulin-Smith – Bank of America

Steve Byrne – Bank of America

Ross Gilardi

Good afternoon, everybody. My name is Ross Gilardi. I’m the Senior U.S. Machinery Analyst at Bank of America. I cover the heavy equipment stocks at the bank. I’m joined by my colleagues, Julien Dumoulin-Smith and Steve Byrne, who you all know quite well at this point. Hope everybody is having a great day. This afternoon, we’re very pleased to welcome Cummins, Amy Davis, Cummins’ President of their New Power Systems Business to join us and joining Amy, as James Hopkins who is on audio and is our Investor Relations Head and everyday contact.

Cummins is freshly off a special hydrogen event that they held in mid-November. For those of you that didn’t have an opportunity to participate in that there’s a lot of great information on Cummins’ website. And today, obviously, we’ve got a great opportunity to, you know revisit that information and get a better greater understanding of how hydrogen fits into the mosaic for Cummins, but Amy, thanks so much for being with us today for the event. And maybe we can start off, you know, the whole event for this – the whole backdrop for this event, obviously, is that the world needs hydrogen to increasingly meet its environmental goals. And maybe you could just start off as why does hydrogen actually need Cummins?

Amy Davis

Yeah, thanks, Ross. I hope everyone can hear me okay. I’m really happy to be here with all of you today. You know, Cummins is 100-year participant in this industry. And many years ago, we made the commitment to go beyond being a diesel engine manufacturer and offer the power of choice. So, we really have been partnering in many applications and industries in the commercial space on what their power needs are. So, we’ve been in hydrogen. I’ve been with the company more than 25 years. And when I joined the company, we had fuel cell projects going on. So, we have been exploring and seeking to understand these technologies throughout their adoption. And we’re key to participating in that.

The other thing that I think we bring is that deep application knowledge, which is going to be really important for our end users, and our consumers, ultimately, to avoid changing the entire way they operate their systems. We need players who understand how those applications work. And they’re usually very challenging in often robust environments, heavy use. And so being able to design products and technologies to live in those environments, and then also have service capabilities to service them is going to be really key for our end users. And ultimately, that’ll be key to getting the technology advanced for the right use at the right cost.

Ross Gilardi

Got it. Great. You know, from there, look, I’d love to get your perspective, you know Cummins has been around for over a century and seen a lot of hype over the years on a lot of new technologies that never quite lived up to their promise, why do you think hydrogen is different?

Amy Davis

Well, I hope hydrogen will be different, but I think there are most definitely a lot of learnings to have, probably most, in particular from the natural gas experience that we have. Cummins was really a leader and is a leader still in natural gas applications. But a lot of the promise never really played out. And I think that’s largely due to infrastructure, and the costs coming down the curve. So, it’s a chicken in the egg. Without the infrastructure, people don’t place the bets on the orders. So then the scale doesn’t happen, and then the cost doesn’t come down the curve.

So, natural gas remained a real niche application, it’s still a really great alternative if people are looking at low carbon solutions and low emission solutions. But it’s still a very expensive and challenging one for fleets to implement. So, to be successful in hydrogen, we’re going to have to address those same things and infrastructure is going to be really important to that in my view. And I think most people would say that we’re playing in this space, because at the end of the day, huge variety, like I said, of applications that will want access to fuel cells, and they’ll need fueling capability, as well as access to the fueling.

And ultimately, it needs to be green hydrogen, because if we’re going to address the carbon situation, we need green hydrogen available. So, the whole green hydrogen availability, and grid, as well as the infrastructure to fuel hydrogen is going to be really important to customers placing the bet and placing orders. And the orders are going to be key for us being able to scale, scale the supply chain and drive costs down.

Ross Gilardi

Maybe you could help paint the mental picture for us with Cummins and all the different ways you’re invested in hydrogen right now, because you have a lot of very fascinating partnerships. You got Hydrogenics, you have things going on in infrastructure and storage. Maybe you could just talk about a few of the different, you know, building blocks to Cummins’ hydrogen strategy and how they all fit together?

Amy Davis

Yeah, I’ll do my best Ross. You’re right. I don’t want to leave anything out. That’s why James is on to make sure I don’t miss anything. We [didn’t complex] in quickly evolving landscape for us, but probably notably, the Hydrogenics investment was really key for us, giving us access to a talent pool and a technology capability, a product platform, both in electrolyzers, which is technology for hydrogen production. So, we have both alkaline and PEM, electrolyzer technology that we were able to acquire through the Hydrogenics deal. And then we also have fuel cells. And what’s interesting, and I think really advantageous for what Hydrogenics brings us is lots of applications.

So, they’ve been in this selling the equipment out into a wide range of applications for many years. So, there’s over 2,000 fuel cell applications that Hydrogenics have in a wide array of applications. So, there’s been learning and so that application knowledge, like I said in the very beginning is something that Cummins thinks is really important. Because the adoption curve of this is so long that it’s going to be the fifth or sixth iteration of our designs that really are the ones that are going to win. And so the faster we can get learning from applications and get the next iteration of a design out into the field, the quicker we’ll be able to learn, and the quicker we’ll be able to drive cost down and the application use of the technology up.

So, that’s one. Also, so just one more thing on Hydrogenics, I’m going to mention is like footprint. So, lots of market access, lots of relationships, which I think are going to be key particularly on the electrolyzer side, with so many applications out there. So many partnerships to deliver those. We have a manufacturing capability in Belgium, and also in Canada to start from and leverage from. So, that kind of embedded footprint is also going to be an advantage that we got from Hydrogenics. And then we also made a technology investment with Luke Energy, which is a really interesting technology company. And we have a partnership with Hyundai.

So, we’re trying to leverage partnerships to get the best technology learning and solution. Because ultimately, as I said, where we land in say 2030 and get that technology, right, that’s going to be the winner. And so we want to make sure we pull from all the experts and leverage lots of partnerships to get there. And then most recently, we announced the NPROXX joint venture, which is tanks and storage for high pressure hydrogen. And that’s going to be key. And it’s interesting we just closed on this a few weeks ago. And already I’ve had a ton of inquiries.

So, this could be an interesting, actually just, kind of an endpoint with customers, because they don’t really understand yet how they’re going to package hydrogen into vehicles and into equipment. And NPROXX brings a lot of that knowledge and capability. And so it’s driving new conversations with customers. So, those are some of the partnerships and investments we’ve made. Combine that with R&D work we’ve been doing over many years that we’ve now kind of pulled into it. And then lots of pilot work. So, we have several DOE projects that we’ve done. And I like pilots for a lot of reasons, because I think if we can get some government partnerships and funding, and then find a partner to do the project with.

It opens up the potential to broaden our partnerships. So, we have a couple of [truck projects]. One with Navistar, one with PACCAR, DOE funded and we have trucks we put into Scandinavia with Scania. So, just doing these pilot projects with OEMs and putting things out there, we open up our sharing and open up that partnership, and then we learn. So, we make sure we target those projects to really learn specific things. And so, we can take that learning and then apply it. So, I think it’s kind of a combination of those elements for us in the hydrogen space it’s going to be important.

Ross Gilardi

Got it, great. Just also, before I go on, I just wanted to invite anybody who’s on the line who wants to submit any questions via the webcast platform feel free to do so. But maybe you could expand on that a little bit Amy. Steve, I’m not sure if you’re still on, but wanted to invite you into this part of the conversation, if you like. Maybe you could talk about how you are working with the industrial gas companies at all. I believe that the Air Liquide that maintains the minority stake in Hydrogenics and are you working with them at all to develop low cost solution?

Amy Davis

Yeah. So, thanks for mentioning that. Actually, my mind was going as I was thinking about what I might have missed. And certainly our Air Liquide partnership is an important one. In the hydrogen production space, I think the Air Liquide partnership is going to be important. But actually there’s going to be so many different paths to market access. And we’re trying and working on multiple avenues.

So you know, there’s industrial gas players, there’s utilities, there’s actual end users who are looking at building out some infrastructure of their own. There’s oil and gas companies, those industry who want – who already have hydrogen today in their industrial production. And so making that green hydrogen is another market access opportunity. So, we’re talking to lots of players Air Liquide is an absolute key partner. Thrilled to have them and work with them in our project that we’re doing now.

The largest PEM electrolyzer plant in the world is just being commissioned in Becancour, Canada and that’s a project we’re doing with Air Liquide, and so we’re seeing that partnership yield real projects. And we also announced a partnership with Sinopec in China. So, that’s kind of a different type of partnership that will give us some access to a lot of the emerging opportunities in China, and we’re actively talking with many others.

Ross Gilardi

Okay, got it. Steve, were you still there?

Steve Byrne

Yeah, I’m here. Ross.

Ross Gilardi

Did you have anything you wanted to chime in on industrial gas companies? I got plenty of questions, but just want to give you an opportunity.

Steve Byrne

I guess I would like to hear your view on electrolyzer efficiencies. We had Mackenzie on a couple of hours ago, and they have an electric chemical expert that was on the – in the session. And we talked a little bit about the – just the overall efficiency of these electrolyzers. So, you know, there’s clearly a lot of focus on CapEx and at the cost of these electrolyzers is going to come down over time, and that’s going to lower the costs for the green hydrogen.

Obviously, there’s a lot of focus on the cost of the electrical power. But the other piece, I would say, the third key driver of overall cost is how efficient is the electrolyzer. Is it, you know, 45 kilowatt hours to make a kilogram? Is it 55 or is it 65? And I’ve seen all three of those. And that’s a pretty big range. Can you comment on that? And do you see, you know, the Hydrogenics technology moving that metric down?

Amy Davis

Yeah. I’ll comment broadly to it, Steve. Absolutely, efficiency is going to be a really important part of the total cost of ownership. And it’s why we really believe in our PEM technology. And I’m excited to see the results as we commission the Becancour site, because we’re already seeing some really good positive production signs from what we’re seeing. And we’ll be watching that. But, you know, in addition to scaling PEM technology, for the supply chain cost benefits, there’s going to be technology benefits that we’ll be able to apply to the design.

So, it’s going to be the combination of the design and improvements that we can make in the actual PEM technology, as well as the scaling of that which will affect the CapEx costs that will combine, which we think in the end will make PEM win out quite a bit over alkaline technology in the electrolyzer market. Although, you know, Hydrogenics has both and so we’re active in both and – but I think that’s why we’re excited about getting bigger projects with PEM, so we can learn – apply that learning and keep improving the efficiency.

Steve Byrne

Thank you.

Ross Gilardi

Julien do you have a [indiscernible]?

Julien Dumoulin-Smith

Yeah, if you don’t mind Amy again, June [indiscernible] here, you know from the [ClinTec] perspective. But you know what’s fascinating about what you guys said here? And, you know, obviously this is why we have so many people and volunteers. You know, you guys are looking from a tracking perspective, you got this electrolyzer angle? I mean, from my vantage point I’d be curious, I mean, how do you think about the real tangible deployment cases?

You alluded to some of these pilots, but really more specifically, what are some of the more meaningful, meaty opportunities that folks should be looking at and saying, that’s where the first real used cases are going to be? And again, you know, obviously U.S. centric here, but whether it’s Europe or elsewhere, I’m curious what are the real opportunities, maybe not necessarily pilot stage, but really the ones that will push you because you’re following both sides of this, you know, presumably with some kind of trucking application?

Amy Davis

Yeah. I mean, it’s really the hardest thing about this job. Julian is balancing this long adoption curve and this sort of technology development, well, in a couple of places trying to scale and clearly electrolyzers we think are – we’re going to be scaling and leveraging some of Cummins industrial manufacturing capabilities to scale. Because a lot of the hype that really just accelerated this year, we’re starting to see it in our project pipeline. So, we’re starting to see now, more actual tangible projects hit the market.

We’re seeing a tightening of the timeline for those to actually be decided upon. I mean, I think historically, an electrolyzer project could take two years to sort of form and pan out and get quoted in the decision made, we’re seeing that Titan. And we’re even seeing some RFI’s now for projects that would be in the 12 months or less time period. So, I think electrolyzers are tangible. They’re going to be a source of profit for us. And they’re going to be an important mid-term opportunity to enable us to keep investing, but also enable the adoption of fuel cells.

The second thing that’s super tangible for us, and exciting is rail. So, we talked a lot about Alstom and our partnership there. But rail is interesting, because there’s a lot of pressure on commuter rail lines to electrify them. And when you look at the used case of taking a diesel, a traditional diesel powered line and electrifying it, you know, you can do it with the fuel cell or you can do it by electrifying the whole line. And the cost of doing that is so expensive. And the time it takes to build that out is actually long compared to applying fuel cell electric drive train. And you can have point-to-point fueling.

It’s a very nice duty cycle because it’s more of a constant speed for a fuel cell. And we have a commitment with Alstom to be putting trains out in very specific – in Austria and in France and some very specific deals that are commissioning and we’re getting ready to launch production in Herten, Germany to be our main Alstom production site. So, in that case, like it’s coming. There’s a lot of interest in rail. And I would say you know the hydrogen council said by 2030 rail will be one of the biggest adoption areas with fuel cells as will bus be. So bus is another area, which also has been leading in battery electric.

So, we don’t talk a lot about it because there’s so much hype on hydrogen, but you know, we are a power of choice. So, we also do battery electric. And at the end of the day, a fuel cell is just a battery electric vehicle with a fuel cell power source to either be an alternative power source or range extender. So, there’s a lot of commonality across the power train. So, we’re seeing bus actually be interested in fuel cells as well. Again, point-to-point you can centralize fueling, you can address the infrastructure, there’s a lot of public funding to help offset it. And so, we launched to deal with Bustech in Australia, which is interesting because they’re going to have a battery electric and fuel cell electric solution from Cummins.

And I think ultimately for mobility, it’s going to be this mixed fleet solution because there’s very few fleets that have a very simple straightforward duty cycle. So, even buses where you think, okay, that can all be battery, not necessarily because you do have those longer routes into the suburbs, etcetera. So, you want to get that range, peace of mind. So that complement the two together. I think as it goes into truck, that’s what you’re going to see is a compliment of, how do I best get my fleet to a zero emissions, zero carbon solution by 2030. Some are saying 2040, you know it’s going to be in those next 20 years. It’s going to be this combination. And so, I think one exciting thing, we don’t talk a lot about in these kind of sessions is, we’re participating in the traction drive component development by leveraging our experience with diesel hybrids, natural gas hybrids, battery, electric, and now fuel cell electric.

So, that’s a new market for us. We don’t talk a lot about that those will be new components we’re selling. We’ve already put some of those out into the field with a customer like GILLIG bus here in North America. So that’s exciting to have some new avenues to talk about. And I know I made a little long winded on this one. But I think that’s the other thing we’re thinking hard about, because I think the hydrogen council projects heavy duty truck adoption rate of fuel cells to be around 2.5% in 2030. So that’s still quite low by 2030.

So, you know, we’re in so many applications. You know, where could we be looking to see if it might go faster. There’s a lot of talk about mining, for example. There’s a lot of interest there. Lot of mine sites that are actively talking to us about how they might approach a solution. Marine is another one. So, there could be some new segments for us that might be niche, but we’re already in them. So, they might not be that hard for us to bring to market because we have the support – distribution support system and the relationships with those customers.

Julien Dumoulin-Smith

If I can, because I obviously am a little power bias, I’m a electric guy, what are those applications where EV’s or batteries don’t make sense, and the speed of recharging or what have you really enables those niche hydrogen opportunities versus battery, because that’s really come up on this session, and throughout the day as, use of highlight might be obvious, but I’m curious if you could elaborate on, because you’re obviously looking at both sides? And those niches with mining, I imagine are more specific to how quickly you can read power and things like that.

Amy Davis

Yeah, I mean, at the end of the day, batteries have this inherent problem of you have to cart around the weight, and the package of that energy storage. And so, you know, weight sensitive applications become a really big deal. Because if I’m hauling, and how much I haul is how I’m getting paid than decreasing that dimension, that isn’t just a direct impact on my profit. So, mining, as I talk about, you know, long haul trucking, heavy duty trucking, it has to go long distances over hard poles, mountains, and it matters how much you’re hauling. And those kinds of things, it’s hard for me to see a path for battery unless customers ultimately just change the way they operate, or battery technology completely transforms.

And I know there’s a lot of hype out there about where that might go and where it might land ultimately, and most certainly, there’s a lot of innovation and we’re active in it. And you know, and really close to it. But I just think there’s some and the fuel cells come down. It’s a huge peace of mind on range. So, if the cost comes down and you can size it, so that it’s just a range extender, it’s a huge peace of mind for people in terms of being able to just go the distance and not have to worry about charging and other things that can just help offset the charging time and other things. And so that’s why I think fuel cell might creep down into some of these other segments because of that peace of mind, and it gives you so much flexibility in your operation.

Ross Gilardi

Thanks, Julien. Amy, I just love to get your perspective, you know, Cummins is a very conservative company, historically. You serve mature markets, and you got this enormous growth opportunity in front of you, which actually has obviously got a lot of implications for your core business as well. But, you know, the company I think at the Investor Day said they’re going to spend $25 million to $30 million in 2021, which it doesn’t seem like a major financial commitment, and I get – what I’m getting at is, do you think the company is prepared if necessary, if this really was to take off faster than expected to make a much larger investment to really establish itself as a technology leader.

Amy Davis

Yeah. So Ross, just one comment on that. I’m not sure that I know all the details of the Investor Day, but I believe in 2021 we’re investing more like 200 million. So, it is a fair and have been investing at a pretty high pace for the last couple years, and James is on the line. He can correct me, but given that I dive through those investments pretty regularly, it’s a much different scale than what you mentioned and 200 million is closer in line, which I think is a good investment. I mean, my perspective on this is, this is going to be a long game. And, you know, I just quoted the numbers, right?

So, 20%, 32.5%, heavy duty truck adoption, you know, that’s not. I mean, people talk about it. They’re excited about what we see, but the actual numbers playing out, it’s a long game. And so, I think Cummins is in an interesting position, because we have this core to fund us, you know, and we have a lot of innovation, that we’ve been working in this space for a long time. And we, I think, have made clear our intention to win in the long-term. So this is not like I have to win next year. We’re more realistic than that. So, you call us conservative. I might say, we’re realistic.

I feel really a grounded company, in our culture in the sense that we say, okay, where’s this all going to land and how do we not get caught up in some announcements somebody made somewhere on YouTube? How do we stay focused on when is it going to matter that we have the right technology there? What are the right partners to have? And we have those, and we’re talking to them all the time, we’re doing projects with them all the time. So, I feel like we’re making the right investments, and we’re able and planning to do it year-over-year in the right way to scale in the right moments, find the right niches to fund that, to make it for the long haul, which I’m excited about.

Ross Gilardi

James, maybe you could clarify those, those numbers. Was the 200 million more for the overall New Power Segment or specifically on hydrogen, because like, I got that $25 million to $30 million number? I thought from your from your Hydrogen Day, but maybe I’m talking about it just a small subset of the overall investment.

James Hopkins

Yeah. The 200 million that was referenced in the Hydrogen Day was the EBITDA losses of the New Power Segment, initial estimates for next year. And that’s primarily Research and Engineering. Separately, Mark mentioned the number that you referenced, which is really related to CapEx investment. And so that’s kind of a separate number. So, about 200 million next year, EBITDA compared to in the range of 170 million this year. And keep in mind I’d say Ross that, you know, the company in aggregate, last year, for example, spent a billion dollars on research and development.

And so, we’re constantly looking at our portfolio of technology investments to determine how to prioritize those. So, to your original question on ability to change direction, reallocate. We’ve been doing that for many, many decades. Whether it’s between diesel technologies, between diesel and natural gas, now we simply have even more choice on the power train that we’ll continue to do what we’ve done on portfolio management for many decades.

Ross Gilardi

Got it. Great, thanks for clarifying that. Maybe you could talk a little bit more about your financial target and the 400 million plus of electrolyzing revenue by 2025. Can you say like what the target is more for 2021? I’m just trying to get a feel for how back and loaded are your projections? And what are the mileposts we should be looking out for between now and [2025] to know you’re on track or get a sense if you’re just well beyond, you know what you’re aiming for right now?

Amy Davis

Yeah. I can’t give specific numbers for 2021. We haven’t really given any guidance for 2021 at this point in time. What I would say is that I’m watching our pipeline. So, we have a very systematic quoting, review, maybe sounds very elementary, but I think it’s fundamental to making sure you know, there’s – many of these public – these projects are very public. So, assessing, you know, I pay a lot of attention personally to, are we a part of all of these RFIs? Is there any we’ve missed out on? Do we not have the right market access? Are we doing that? And then as these projects come to fruition, you know, what’s our win rate etcetera?

And so from what I’m seeing in our pipeline, I feel well-positioned or we wouldn’t have made that commitment, you know, but that’s what I’m watching and I think when we start, you know, it can be very public. So, if you want to watch that, I think you can at the Hydrogen Council even, I think publicizes some of the public projects that are out there. And so, you can watch that and sort of start to see the win rate and that’s, you know, and I think it’s going to be important, you know we did a 20-megawatt project, [back and core], I think we’ve got a [10 million one] in our pipeline.

I’d like to see a big, you know I’d like to start scaling and, you know we’d love to be a part of a 50 megawatt or 60 megawatt kind of project. And I think that’s enough that’s going to be another thing that’s going to be important is to, you know, get in on one of those in the next couple years. And those are going to take a couple years to actually come to fruition, but get in those in a couple years. And then it’s just going to prove the technology to so many people, because it’ll be very visible in a good way back to your efficiency question to show the efficiency of our PEM technology.

Ross Gilardi

Maybe just on that, you could talk a little bit about, you know, how you manage your customer relationships through all this, particularly on the trucking side, because clearly, everybody has got their hands in the pot here, and there’s many, many tracks, you know, to the future, I think, you know, Shell, Daimler, Volvo, and Iveco performed a consortium in Europe, to co-invest in hydrogen trucks and fueling infrastructure and attempt to scale up. And, you know, some of those guys would be, you know, customers, obviously, so how do you manage that and essentially, avoid competing with your customers to find the optimal solution?

Amy Davis

Yeah, I mean, there’s a lot to react to in that. The first thing I would say is, Cummins has made a 100 year history out of competing with our customers. I think from day one, our customers made their own engines, their own equipment, and had to pick and choose. And so, we’ve navigated that throughout our history. That’s a part of who we are as a company as managing this partner, competitor, how do we share, how do we keep collaborating, and we have relationships that, you know, I remember, so, I’ve been in truck side of our business, a lot of my career, and I was in when we had a big issue, and many of you aren’t in it as close as I am, so forgive me if this doesn’t resonate, but Navistar was announcing they were going to take a different technology path when we were going out with [SCR] and there was a big bunch of publicity.

And, you know, we stayed close with Navistar. And when they made some technology decisions, changed their mind. And now we’re right back with them. So, my view is, our relationships with OEMs are deep. I know, all I’m like – for my career, like I know all of them, when I took the job, they pick up the phone call me, we have regular product planning sessions with them, that include a path to decarbonization. So, it’s – we’re a part of that now. As an incumbent, we have to be part of that conversation. And we will continue to be because of that position. And as I’ve said, you know the landing position of where the technology is, has to be right when the adoption happens. And so, we’re committed to that.

We leverage our deep relationships through common senior leadership. And then we’re talking to a lot of the new players. So, you know, I think that’s interesting is to make sure that we’re talking to all the new players because they bring exciting innovation that we can learn from. So, on the truck side, I’m really happy with the projects that we have in place. The planning conversations we’re having, I see a lot of these announcements. But I think a lot of the trick is the specifics in them, and how they play out over time and how tangible they become over time. And because we’ve seen some of those come together and break apart in this space, more than one even just in the time that I’ve been in it in the last year.

Ross Gilardi

That’s a great answer. I love your answer to that question because you – Cummins has been in this situation throughout its history so many times where you’re kind of dual tracking it with your customers and everybody’s trying to figure it out all at once. So, thank you for that. I had a couple of questions, just from the audience. I wanted to make sure I got into within the last five minutes.

One of the investors was asking if you think a liquid hydrogen onboard solution is necessary to see true penetration for hydrogen powered trucks in truckload applications.

Amy Davis

I don’t, but I have to say, I’m probably not the best guru on ultimately, the way this will play out, but I don’t think so. Like, I don’t think liquid hydrogen is going to have to be key to the answer.

Ross Gilardi

Okay. And then another investors’, you know, you’ve kind of touched on this already, but I’ll ask just directly the way the investor is asking, do they – does Cummins think you’re too conservative with your expectations at your Hydrogen Day or is Hydrogen adoption really still a decade away?

Amy Davis

Well, I would just point out that we use the hydrogen council figures. And James can comment on this, because we had a lot of discussion around, you know, how we were and how we land. And I like the answer of using an external numbers of people and experts who are dedicated to analyzing this, we have our models, a lot of people have models. So, that’s why, you know, I think that was a good decision as to keep looking at external, keep doing our own modeling, but also keep watching the external.

So, it keeps us balanced. So, I don’t think so. I think it’s such an important guess, you know, this crystal ball. I wish I had it, because it would help me plan this business a lot better. But, yeah, so we use those figures from Hydrogen Council. Those are the adoption rates I quoted here today. And I think those are good numbers. I think they’re balanced and realistic. Could it go a little bit faster? It could. And I’m okay, if it does, because I feel, you know, good about all the assets we have in the space, and we’ll be ready. But that, you know, that’s kind of how we have been looking at it to try to balance our own internal views to make sure we’re always looking outside.

James Hopkins

And I might just add to that, Ross. I mean, I think the key on that question is the fact that to the extent the adoption speeds up or slows down versus those expectations, Cummins will be fully ready for going either way. So, if those projections that we shared at Hydrogen Day in no way, shape, or form, change our ability to accelerate engineering programs, or ensure we have the right manufacturing capacity for a more aggressive timeline.

Amy Davis

But I’ll just share with you guys something really interesting that I maybe I should or shouldn’t share, but I was having a conversation with a key OEM that most people would know, you know, certainly, and they called hydrogen an expensive marketing project. And then you have another OEM, another name competing, right, directly committing their whole entire company to its future. And that’s the kind of polarity that I still see with some of our customers. And there’s no doubt in my mind that Europe and China are going to have to lead here. And if they lead as strong as they’re stating, the industry is going [to follow], I think, but, you know, there’s a lot of commitments and actions that have to happen from the announcements being made to make that a reality.

Ross Gilardi

I bet I can guess who those two OEMs are. [Indiscernible] different points of view, but we can talk about that another time. We’re about out of time now. And I know we want to keep on schedule. They got a full agenda here today. But Amy thanks so much for being with us today. It’s fascinating to learn about your business and see how Cummins is going about it. Wish you all the success in the future and executing your plan. And Julien and Steve, thanks for including us today. And James, thanks for being here, and Happy Holidays, everybody.

Amy Davis

Thanks, everybody. Really appreciate being here.

Ross Gilardi

Thank you.

Question-and-Answer Session

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