Annual report pursuant to Section 13 and 15(d)

INVESTMENTS IN EQUITY INVESTEES

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INVESTMENTS IN EQUITY INVESTEES
 12 Months Ended
Dec. 31, 2024
Equity Method Investments and Joint Ventures [Abstract]  
INVESTMENTS IN EQUITY INVESTEES
NOTE 3. INVESTMENTS IN EQUITY INVESTEES
Investments and advances related to equity method investees and our ownership percentages were as follows:
  Ownership December 31,
Dollars in millions percentage 2024 2023
Komatsu alliances
20-50%
 $ 322  $ 331 
Amplify Cell Technologies, LLC 30% 187  — 
Beijing Foton Cummins Engine Co., Ltd. 50% 185  194 
Sistemas Automotrices de Mexico S.A. de C.V. 50% 150  149 
Dongfeng Cummins Engine Company, Ltd. 50% 128  128 
Automotive Axles Limited 36% 123  125 
Chongqing Cummins Engine Company, Ltd. 50% 120  110 
Tata Cummins, Ltd. 50% 96  89 
Cummins-Scania XPI Manufacturing, LLC 50% 88  85 
Freios Master 49% 78  84 
Other Various 412  505 
Investments and advances related to equity method investees   $ 1,889  $ 1,800 
We have approximately $827 million in our investment account at December 31, 2024, that represents cumulative undistributed income in our equity investees. Dividends received from our unconsolidated equity investees were $308 million, $257 million and $318 million in 2024, 2023 and 2022, respectively.
Equity, royalty and interest income from investees, net of applicable taxes, was as follows:
  Years ended December 31,
In millions 2024 2023 2022
Manufacturing entities      
Dongfeng Cummins Engine Company, Ltd. $ 66  $ 65  $ 45 
Chongqing Cummins Engine Company, Ltd. 60  36  32 
Beijing Foton Cummins Engine Co., Ltd. 42  47  37 
Tata Cummins, Ltd. 31  29  27 
All other manufacturers 25 
(1)
 91  28 
(2)
Distribution entities
Komatsu Cummins Chile, Ltda. 55  55  44 
All other distributors 17  16  11 
Cummins share of net income 296  339  224 
Royalty and interest income 99  144  125 
Equity, royalty and interest income from investees $ 395  $ 483  $ 349 
(1) Included a $17 million impairment of our joint ventures in the fourth quarter of 2024 related to Accelera strategic reorganization actions. See NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," for additional information
(2) Included a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the indefinite suspension of our Russian operations. See NOTE 24, "RUSSIAN OPERATIONS," for additional information.
Manufacturing Entities
Our manufacturing joint ventures were generally formed with customers and are primarily intended to allow us to increase our market penetration in geographic regions, reduce capital spending, streamline our supply chain management and develop technologies. Our largest manufacturing joint ventures are based in China and are included in the list below. Our engine manufacturing joint ventures are supplied by our Components segment in the same manner as it supplies our wholly-owned Engine segment and Power Systems segment manufacturing facilities. Our Components segment joint ventures and wholly-owned entities provide axles, drivelines, brakes and suspension systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics that are used with our engines as well as some competitors' products. The results and investments in our joint ventures in which we have 50 percent or less ownership interest (except for Eaton Cummins Automated Transmission Technologies joint venture, which is consolidated due to our majority voting interest) are included in equity, royalty and interest income from investees and investments and advances related to equity method investees in our Consolidated Statements of Net Income and Consolidated Balance Sheets, respectively.
•Dongfeng Cummins Engine Company, Ltd. - Dongfeng Cummins Engine Company, Ltd. (DCEC) is a joint venture in China with Dongfeng Automotive Co. Ltd., a subsidiary of Dongfeng Motor Corporation and one of the largest medium-duty and heavy-duty truck manufacturers in China. DCEC produces 3.9 liter to 14.5 liter diesel engines with a power range from 80 to 760 horsepower, natural gas engines and automated transmissions. On-highway engines are used in multiple applications in light-duty and medium-duty trucks, special purpose vehicles, buses and heavy-duty trucks with a main market in China. Off-highway engines are used in a variety of construction, power generation, marine and agriculture markets in China.
•Chongqing Cummins Engine Company, Ltd. - Chongqing Cummins Engine Company, Ltd. is a joint venture in China with Chongqing Machinery and Electric Co. Ltd. This joint venture manufactures several models of our heavy-duty and high-horsepower diesel engines primarily serving the industrial and stationary power markets in China.
•Beijing Foton Cummins Engine Co., Ltd. - Beijing Foton Cummins Engine Co., Ltd. is a joint venture in China with Beiqi Foton Motor Co., Ltd., a commercial vehicle manufacturer, which has two distinct lines of business - a light-duty business and a heavy-duty business. The light-duty business produces our families of ISF 2.5 liter to 4.5 liter high performance light-duty diesel engines in Beijing. These engines are used in light-duty and medium-duty commercial trucks, pick-up trucks, buses, multipurpose and sport utility vehicles with main markets in China and Brazil. Certain types of small construction equipment and industrial applications are also served by these engine families. The heavy-duty business produces 7.0 liter to 14.5 liter high performance heavy-duty diesel and natural gas engines in Beijing. Certain types of construction equipment and industrial applications are also served by these engine families.
•Tata Cummins, Ltd. - Tata Cummins, Ltd. is a joint venture in India with Tata Motors Ltd., the largest automotive company in India and a member of the Tata group of companies. This joint venture manufactures Cummins' 3.8 to 8.9 liter diesel and natural gas engines in India with a power range from 75 to 400 horsepower for use in trucks and buses manufactured by Tata Motors, as well as for various on-highway, industrial and power generation applications for Cummins.
In September 2023, our Accelera business signed an agreement to form a joint venture, Amplify Cell Technologies LLC, with Daimler Trucks and Buses US Holding LLC (Daimler Truck), PACCAR Inc. (PACCAR) and EVE Energy to accelerate and localize battery cell production and the battery supply chain in the U.S., including building a 21-gigawatt hour battery production facility in Marshall County, Mississippi. The joint venture will manufacture battery cells for electric commercial vehicles and industrial applications. The joint venture received all government approvals and began operations in May 2024, but is not expected to begin production until 2027. The joint venture meets the definition of a variable interest entity since the equity-at-risk is not currently sufficient to support the future operations of the joint venture. Accelera, Daimler Truck and PACCAR each own 30 percent of the joint venture and have two board positions, while EVE Energy owns 10 percent and has one board position. All significant decisions require majority or super-majority approval of the board. As a result, we are not the primary beneficiary of the joint venture, and the joint venture is not consolidated. We account for the joint venture using the equity method. As of December 31, 2024, we had contributed $211 million, and our maximum remaining required contribution to the joint venture was $619 million, which could be reduced by future government incentives received by the joint venture. In addition, we are required to purchase 33 percent of the joint venture's output in the future or be subject to certain penalties.
Distribution Entities
We have an extensive worldwide distributor and dealer network through which we sell and distribute our products and services. Generally, our distributors are divided by geographic region with some of our distributors being wholly-owned by Cummins, some partially-owned and some independently owned. We consolidate all wholly-owned distributors and partially-owned distributors where we are the primary beneficiary and account for other partially-owned distributors using the equity method of accounting.
Komatsu Cummins Chile, Ltda. - Komatsu Cummins Chile, Ltda. is a joint venture with Komatsu America Corporation. The joint venture is a distributor that offers the full range of our products and services to customers and end-users in Chile and Peru.
In certain cases where we own a partial interest in a distributor, we may be obligated to purchase the other equity holders' interests if certain events occur (such as the death or resignation of the distributor principal or a change in control of Cummins Inc.). The purchase consideration of the equity interests may be determined based on the fair value of the distributor's assets. Repurchase obligations and practices vary by geographic region.
All distributors that are partially-owned are considered to be related parties in our Consolidated Financial Statements.
Equity Investee Financial Summary
Summary financial information for our equity investees was as follows:
  Years ended and at December 31,
In millions 2024 2023 2022
Net sales $ 11,190  $ 9,998  $ 7,501 
Gross margin 1,760  1,597  1,211 
Net income 860  677  475 
Cummins share of net income $ 296  $ 339  $ 224 
Royalty and interest income 99  144  125 
Total equity, royalty and interest from investees $ 395  $ 483  $ 349 
Current assets $ 6,626  $ 4,922   
Long-term assets 2,597  2,021   
Current liabilities (4,203) (3,812)  
Long-term liabilities (549) (432)  
Net assets $ 4,471  $ 2,699   
Cummins share of net assets $ 1,866  $ 1,786