Dana Incorporated (DAN Quick QuoteDAN - Free Report) is refining its strategy as electrification demand turns choppier. The focus is shifting toward programs where content, pricing and execution can more reliably drive profitability, while still keeping exposure to longer-term growth themes.

With a solid new-business pipeline and an ongoing cost transformation, Dana’s near-term story is increasingly centered on mix and operational discipline. At the same time, the company is broadening its demand base beyond traditional original-equipment cycles.

Dana Shifts Focus to ICE and Hybrid Programs

Dana is leaning more toward higher-margin internal combustion and hybrid programs, while becoming more selective in bidding for new electric-vehicle platforms. The shift reflects a preference for business with clearer returns and lower execution risk.

Within electrification, the company is prioritizing range-extended applications, allowing it to stay relevant in the transition without depending heavily on volatile battery-electric volumes.

EV Softness Creates Both Mix Benefits and Risk

Electric-vehicle demand remains soft in the Light Vehicle segment, with lower product orders through 2025. Dana also recorded EV program termination charges in the fourth quarter, indicating that some programs are being scaled back rather than ramping as initially expected.

In the near term, this shift supports margins by tilting the mix toward ICE and hybrid programs. However, if the slowdown in battery-electric adoption persists, it could limit Light Vehicle unit growth beyond 2026, even as traditional programs provide some stability.

This backdrop matters across the supplier landscape. BorgWarner Inc. (BWA Quick QuoteBWA - Free Report) , which markets propulsion solutions spanning combustion, hybrid, and electric systems, is also navigating a market that is balancing legacy demand with an uneven electrification cadence.

Aftermarket Expansion Targets a Clear Opportunity

Dana now aims to expand its higher-margin aftermarket business, with sealing and gasket products at the center. Management sees a roughly $250 million opportunity in North America as the company builds on its established European presence.

Growing this segment not only improves margins but also reduces reliance on cyclical OEM demand. A stronger aftermarket mix can help stabilize performance during softer production environments while leveraging Dana’s core capabilities.

Applied Technologies Open New Growth Avenues

Dana is also building out its “Applied Technologies” initiatives to diversify beyond traditional auto markets. The company is targeting adjacencies such as powersports and defense, representing a $400-500 million incremental revenue opportunity over time.

These segments tend to be less cyclical and carry higher margins, offering a more balanced growth profile. Over time, they can complement the core automotive business and provide an additional layer of demand resilience.

A useful comparison here is Allison Transmission Holdings, Inc. (ALSN Quick QuoteALSN - Free Report) , which has built a strong position across commercial and defense applications.

Investor Takeaway

Investors should track three key indicators— the pace of backlog conversion into revenue, progress toward double-digit margin targets, and evidence of sustained demand beyond battery-electric platforms, particularly in aftermarket and adjacent markets.

DAN stock currently sports 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 Dana’s 2026 and 2027 EPS implies a year-over-year uptick of 1,358% and 25%, respectively. See how DAN’s EPS estimates have been revised over the past 90 days.

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