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Cummins (CMI), PACCAR (PCAR) and Daimler Form a Battery JV

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Accelera by Cummins (CMI - Free Report) , PACCAR (PCAR - Free Report) and Daimler have formed a joint venture (JV) to accelerate and localize battery cell production and the battery supply chain in the United States. Through this JV, the companies plan to manufacture battery cells for electric commercial vehicles and industrial applications.

For the 21-gigawatt-hour factory, total investment is estimated to be in the range of $2 billion to $3 billion. Each of the three companies will own 30% of the JV. The initial focus of the JV will be the lithium-iron-phosphate (LFP) battery technology family for commercial battery-electric trucks. This LFP battery produced by JV will have an edge over other battery chemistries. The battery will be safer, more durable and comparatively cheaper and won’t require raw materials like nickel and cobalt.

Cummins, PACCAR and Daimler expect the demand for battery technology to boom this decade and a state-of-the-art dedicated battery cell factory is expected to benefit U.S. customers. EVE Energy, a Chinese battery cell manufacturer, will hold a 10% stake in the JV and serve as a technology partner. It will contribute its industry-leading battery cell design and manufacturing know-how. EVE Energy is a leading manufacturer of LFP battery cells globally and is traded on the Shenzhen stock exchange.

Jennifer Rumsey, Chairperson and CEO of Cummins, said that through this JV, companies are not only advancing a key technology solution for its customers but are also accelerating the energy transition in the United States.

Preston Feight, CEO of PACCAR, said that the company’s vision is to localize the production of the highest quality battery technology to help customers achieve operational and environmental goals.

This partnership will help Cummins, PACCAR and Daimler reduce carbon emissions consistent with the Paris Climate Agreement.

The transaction is subject to customary closing requirements and regulatory approvals.

Zacks Rank & Key Picks

PCAR currently carries a Zacks Rank #2 (Buy), while CMI carries a Zacks Rank #3 (Hold).

Some top-ranked players in the auto space include Oshkosh Corporation (OSK - Free Report) and Gentex Corporation (GNTX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for OSK’s 2023 sales and earnings implies year-over-year growth of 15% and 126.9%, respectively. The EPS estimate for 2023 has moved north by 23 cents in the past 30 days. The EPS estimate for 2024 has moved up by 6 cents in the past seven days.

The Zacks Consensus Estimate for GNTX’s 2023 sales and earnings indicates year-over-year rises of 17.3% and 29.4%, respectively. The EPS estimate for 2023 and 2024 has moved up by 2 cents and 3 cents, respectively, in the past 30 days.

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