Dana Inc. (NYSE: DAN) spotted the trend toward commercial vehicle electrification four years ago when China offered incentives for smog-beating battery-powered buses. Since then, the Tier 1 automotive supplier has purchased and partnered its way to create all-in zero-emission electric powertrain systems.
The 117-year-old company was founded by Clarence Spicer and later joined by Charles Dana. The company invented the first encased universal joint that eliminated sprockets and chains in automotive engines.
Dana today makes axles, driveshafts, transmissions and electrodynamic, thermal, sealing and digital equipment for Class 8 trucks, earth-moving machines and high-performance sports cars.
Dana is a fixture on the Fortune 500, appearing on the list every year since it began in 1956. The company is evolving with the transportation industry, embracing commercial vehicle electrification.
It is no fad, Ryan Laskey, Dana senior vice president of commercial vehicle drive and motion systems, told FreightWaves.
“Since 2018, we’ve invested $300 million in strategic acquisitions and partnerships. It basically put us in a leadership position within this space,” Laskey said. “And we’ve come to the realization that this isn’t going to be a flash in the pan.”
Dana is not alone. Borg-Warner (NYSE: BWA) is building out its electrification portfolio, acquiring Delphi Technologies for $3.3 billion in October and investing in battery-pack startup Romeo Power Inc. (NYSE: RMO), a freshly minted public startup. Meritor Inc. (NYSE: MTOR) completed the acquisition of longtime electrification partner TransPower Inc. a year ago.
Local regulations changing
Clean transportation regulations like the California Advanced Clean Truck Rule that will require 9% of trucks sold in the state to have no emissions by 2024 get a lot of attention. They motivate truck makers to comply if they want to operate dirtier diesel-powered older models there.
But Dana saw local regulations coming before last year’s clean truck rule and California’s 2035 ban on fossil-fuel powered passenger cars. Four of 10 powertrains (42%) Dana makes are for passenger vehicles. Two in 10 (19%) are for commercial vehicles.
“What you’re seeing is the adoption of green technology and cleaner air being driven by local municipalities,” Laskey said. “When we started to see that, we realized there’s a lot of goods and services that need to get into zero-emission zones.”
In China, where Dana has 23 operations and 6,750 employees, it saw the bus market seeking green solutions as cities sought to reduce smog.
“We started to really put our chips in electrification when China started to put the subsidies in place for transit buses,” Laskey said. “We started to think that trend would really start to flow out to the rest of the industry.
“It’s already cheaper to operate buses in battery electric than in diesel,” he said. “And then you start to get into the medium-duty [truck] space, and you’re really close. You’re probably within a year of crossing over that threshold on cost per kilowatt hour. Then you get into the day cabs that are more regional haul.”
Building core competence
Dana has made eight acquisitions in the electrification space since 2017. It integrates motors, inverters, controls and software as well as thermal management for batteries and power electronics.
Its most recent purchase, of Germany-based electric vehicle software, controls and system integrator Rational Motion, follows the acquisition of Nordresa Motors Inc., which brought battery-management system, electric powertrain controls and integration expertise to Dana.
“We started to enter into what we saw as an unfilled gap,” Laskey said. “A lot of the companies in the industry didn’t have a solution to bring the full package together.”
For example, Dana is providing its e-Power propulsion system, including electric motor and drive system, battery modules and battery management, thermal management and onboard charger and auxiliary systems for the Class 6 Kenworth K270E and Class 7 K370E cabovers and the Peterbilt 220EV medium-duty truck.
The PACCAR Inc. (NASDAQ: PCAR) projects are worth $200 million in incremental sales to Dana.
“We’re in discussions with all major [manufacturers] in regards to electrified solutions,” Laskey said, declining to name potential customers.
In September, Dana said it would build a 50,000-square-foot plant in Pune, India, to make electric motors, inverters and vehicle control units with its TM4 joint venture partner. In 2018, Dana acquired a 55% interest in TM4, a subsidiary of Hydro-Quebec, Canada’s largest electricity producer.
More than 16,000 electric vehicles with more than 600 million accumulated miles contain some Dana components.
A toe in fuel cells
Hydrogen-powered fuel cells are not something Dana is pursuing as part of its electrification strategy. Yet for more than 20 years, its Power Technologies unit has developed bipolar plates used in fuel cell stacks.
“We typically do them in a Tier 2 approach where we don’t finalize the who stack for the hydrogen systems,” Laskey said.
But Dana is integrating fuel cell systems two Class 8 fuel cell electric Freightliner Cascadias under a $15 million project for the Alberta Zero Emissions Truck Electrification Collaboration (AZETEC) in Canada.
AZETEC envisions the trucks traveling the 186 miles between Edmonton and Calgary. They are powered by a Ballard Power Systems fuel cell engine integrated with a lithium-ion battery pack into a Nordresa hybrid electric drive.
The Hyliion investment
Dana also took an early interest in hybrid Class 8 powertrain startup Hyliion Holdings (NYSE: HYLN), providing its Dana Spicer electronic axle for Hyliion’s first product, which adds electric boost to diesel and natural gas-powered trucks.
Dana could have offered the e-axle on its own but chose instead to invest $15 million in Hyliion, good for about a 2% stake in the company that went public via reverse merger in October.
“We went through a lot of analysis with them and the software value they bring to the table. Our investment thesis was not in their manufacturing capabilities,” Laskey said. “We viewed a partnership model versus an acquisition worked well.”
Hyliion’s ERX Hypertruck that goes into production late this year will use Dana systems with a natural gas generator to make electricity on board.
“That small engine is doing nothing but powering a generator to keep the batteries powered,” Laskey said. “So, you can turn it off as you enter into zero emissions zones and run as a zero-emission vehicle without having to deal with the infrastructure that’s required to keep a battery electric vehicle [charged] or potentially fueling a hydrogen fuel cell.”