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Cummins and Hyundai to Collaborate for Fuel Cell Technology

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Cummins Inc. (CMI - Free Report) and Hyundai Motor Company have signed a memorandum of understanding (MOU) for Hydrogen Fuel Cell Technology. The companies intend to evaluate opportunities to develop and market electric drives for commercial vehicles.

The new power trains are anticipated to be developed by integrating Cummins electric power trains, battery and control technologies, with Hyundai fuel cell systems.

Initially, under this agreement, the companies will focus on the North American commercial vehicle market. They plan to work with North American OEMs for the integration of these systems in their vehicles.

The cooperation is a golden opportunity for Hyundai and Cummins to leverage their respective strengths to grow and widen their product portfolios. It is anticipated to have a significant impact on the commercial vehicle market.

The partnership will likely help Hyundai to diversify business and reinforce its global hydrogen leadership through the sale of Hydrogen fuel cell systems. The collaboration will aid Cummins to expand its electrified power product portfolio and Hyundai to strengthen presence in the North American commercial Market.

Over the past couple of years, Cummins has been focusing on introducing innovative products and making acquisitions to generate high returns. In sync with its aim to be a leader in electrified power, it acquired battery specialist Brammo in 2017. In 2018, Cummins took over Johnson Matthey’s UK automotive battery systems business to bolster its electrification and energy storage capabilities. The auto-engine maker further strengthened its portfolio by acquiring Silicon Valley-based Efficient Drivetrains last year. Lately, it has closed the acquisition of Hydrogenics Corporation, which will likely boost Cummins’ ability to innovate hydrogen fuel-cell technologies across commercial markets.

Beside widening its product portfolio through acquisitions, the company signed separate partnership deals with Hyundai Construction and Isuzu Motors last October. It will develop an electric-powered mini excavator with Hyundai. The Cummins-Isuzu Motors team will discover opportunities in the powertrain area. Further, it collaborated with Russia’s KAMAZ to supply electrified power solutions for KAMAZ’s latest line of battery-powered vehicles.

All the aforementioned initiatives are likely to bolster Cummins’ prospects. The company, with a Zacks Rank #3 (Hold), is focused on enhancing shareholder value through aggressive share repurchases and increasing dividend payouts. For 2019, it set a target to return 75% of yearly operating cash flow to shareholders in forms of dividends and share repurchases.

Stocks to Consider

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