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, 2023
Equity Method Investments and Joint Ventures [Abstract]  
INVESTMENTS IN EQUITY INVESTEES
NOTE 4. 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 2023 2022
Komatsu alliances
20-50%
 $ 331  $ 295 
Beijing Foton Cummins Engine Co., Ltd. 50% 194  189 
Sisamex 50% 149  144 
Dongfeng Cummins Engine Company, Ltd. 50% 128  106 
Automotive Axles Limited 36% 125  125 
Chongqing Cummins Engine Company, Ltd. 50% 110  118 
Tata Cummins, Ltd. 50% 89  92 
Cummins-Scania XPI Manufacturing, LLC 50% 85  130 
Freios Master 49% 84  86 
Other Various 505  474 
Investments and advances related to equity method investees   $ 1,800  $ 1,759 
We have approximately $936 million in our investment account at December 31, 2023, that represents cumulative undistributed income in our equity investees. Dividends received from our unconsolidated equity investees were $257 million, $318 million and $336 million in 2023, 2022 and 2021, respectively.
Equity, royalty and interest income from investees, net of applicable taxes, was as follows:
  Years ended December 31,
In millions 2023 2022 2021
Manufacturing entities      
Dongfeng Cummins Engine Company, Ltd. $ 65  $ 45  $ 82 
Beijing Foton Cummins Engine Co., Ltd. 47  37  112 
Chongqing Cummins Engine Company, Ltd. 36  32  39 
Tata Cummins, Ltd. 29  27  18 
All other manufacturers 91  28 
(1)
 131 
Distribution entities
Komatsu Cummins Chile, Ltda. 55  44  32 
All other distributors 16  11  10 
Cummins share of net income 339  224  424 
Royalty and interest income 144  125  82 
Equity, royalty and interest income from investees $ 483  $ 349  $ 506 
(1) Includes 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. In addition, on February 7, 2022, we purchased Westport Fuel System Inc.'s stake in Westport JV. See NOTE 24, "ACQUISITIONS," and NOTE 22, "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, filtration products, 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.
•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 8.5 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.
•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.
•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 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. Accelera, Daimler Truck and PACCAR will each own 30 percent of the joint venture, while EVE Energy will own 10 percent. Total investment by the partners is expected to be in the range of $2 billion to $3 billion for the 21-gigawatt hour facility. The transaction is subject to closing conditions and receipt of applicable merger control and regulatory approvals including submission of a voluntary notice to the Committee on Foreign Investment in the U.S.
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 2023 2022 2021
Net sales $ 9,998  $ 7,501  $ 8,934 
Gross margin 1,597  1,211  1,574 
Net income 677  475  802 
Cummins share of net income $ 339  $ 224  $ 424 
Royalty and interest income 144  125  82 
Total equity, royalty and interest from investees $ 483  $ 349  $ 506 
Current assets $ 4,922  $ 4,252   
Long-term assets 2,021  1,935   
Current liabilities (3,812) (3,224)  
Long-term liabilities (432) (399)  
Net assets $ 2,699  $ 2,564   
Cummins share of net assets $ 1,786  $ 1,715