James Hopkins, vice president of financial planning, capital management and investor relations at Cummins, says it plans to pass along nonconformance penalties (NCPs) the company will pay as part of the EPA's 2027 emissions regulations.
"We will fully pass on NCPs to the market," Hopkins told Morgan Stanley's Laguna Conference. "We will fully offset with pricing."
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Hopkins praised the EPA move, saying the NCPs will give the commercial vehicle industry flexibility to cure what he calls "teething problems" that will give buyers the stability they need and fuel purchases further down the road.
It also allows Cummins to ramp up slowly, compiling product data and releasing new iterations of engines and other products as needed. That way, Hopkins says, when the transition to the new engines happens fully, Cummins can launch a very high quality, best possible product.
"While we already have a very competitive position in North America in terms of our availability, these products will be available on more chassis with more OEMs on launch than we even have today, which is not an easy feat given our already strong position in the market," Hopkins says.
When those NCPs kick in, he says, customers are going to pay more regardless if they chose a 2027-compliant engine or not. That's driving truck purchases now and Hopkins expects that trend to continue.
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"Fleets are generally making a little more money and that tends to drive the purchase of more vehicles," he says.
Cummins also sees significant opportunities to grow in the aftermarket, Hopkins says, and he sees the company continuing to invest.
Where it won't send money, he says, is to Accelera, the companies zero-emissions energy technology brand. The company has continued to "right-size" Accelera, depending on when the adoption curve is, while keeping the underlying technology for the right opportunity.
