Heavy-Duty Automotive Trends and Outlook

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Jasmin Cain
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1 Heavy-Duty Automotive Trends and Outlook Brian Mormino Executive Director Worldwide Environmental Strategy & Compliance Cummins Inc. April 19, 2016

2 Net gain of 200,000 people per day! 2

3 Growing Need for Resources In 15 years... 30% MORE ENERGY MORE MATERIAL 55%EXTRACTION 40% MORE FRESH WATER 50% MORE FOOD Source: KPMG Future State

Environmental & Economic Megatrends Increases in economic forces strain natural resources Economic Driving Forces Population Growth Urbanization Wealth Material resources enable economic forces to

4 Environmental & Economic Megatrends Increases in economic forces strain natural resources Economic Driving Forces Population Growth Urbanization Wealth Material resources enable economic forces to grow Eco-enablers Energy and Fuel Material Resources Water Food Global sustainability depends on successfully managing the interactions Environmental Impacts Realized Or Avoided Source: KPMG Expect the Unexpected: Building business value in a changing world Ecosystem Decline Climate Change Deforestation 4

Cummins Legacy and Core Values we believe that our survival in the very long run is as dependent upon responsible citizenship in our communities

5 Cummins Legacy and Core Values we believe that our survival in the very long run is as dependent upon responsible citizenship in our communities and in the society, as it is in responsible technological, financial and production performance. - - J. Irwin Miller Former Chairman and CEO

6 Cummins Global Presence 55, Countries and territories 154 Fortune 500 rank Internal Use Only Employees worldwide 1919 Founded & headquartered in Columbus, Indiana 4 6 Business units & global power leader continents 6

impact into business decisions and processes Drive compliance and accountability to environmental requirements

7 Cummins and the Environment WE DEMAND THAT EVERYTHING WE DO LEADS TO A CLEANER, HEALTHIER AND SAFER ENVIRONMENT Set environmental direction for the company everywhere we have an impact FACILITIES PRODUCTS Integrate environmental impact into business decisions and processes Drive compliance and accountability to environmental requirements GLOBAL NETWORK CUSTOMERS Inspire individual employee environmental responsibility PUBLIC POLICY EMPLOYEES & COMMUNITIES 7

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Customers and Environmental Success 2014 Actual 65.4 $262 0.65 2020 Goal 350 $1,400 3.

6 million gallons million USD million metric tons (MMT) Rio Tinto - Customer

10 Customers and Environmental Success 2014 Actual 65.4 $ Goal 350 $1, Cumulative 1,563 $6, million gallons million USD million metric tons (MMT) Rio Tinto - Customer Improvements Fuel Use: 4%, 10M Liters Annually CO 2 /Yr: 27,000 MT Savings: $14.2M Annually 3.2M Equivalent cars off the road for a year by

11 Major Heavy-Duty Automotive Trends Emissions Reductions Compliance & Enforcement Future of Fuels GHG / Fuel Efficiency Standards Data & Connectivity 11

6g/HP-hr 6.0g/HP-hr 5.0g/HP-hr 4.0g/HP-hr 2.5g/HP-hr 1.2g/HP-hr 0.

12 Emissions Reductions LOWER NOx NOx / NOx+HC 10.7g/HP-hr 500 PPM Sulfur Diesel Fuel 15 PPM ULSD Diesel Fuel Particulate 0.6g/HP-hr 6.0g/HP-hr 5.0g/HP-hr 4.0g/HP-hr 2.5g/HP-hr 1.2g/HP-hr 0.2g/HP-hr g/HP-hr 0.1g/HP-hr 0.01g/HP-hr Target: 90% further reduction in NOx 12

13 Emission Reductions GLOBAL HEAVY-DUTY ON-HIGHWAY REGULATIONS 13

14 Emission Reductions DIVERSE COMMERCIAL VEHICLE APPLICATIONS 14

15 Compliance and Enforcement IN-USE TESTING Rolling Coal is tampering Heavy-duty in-use testing (PEMS) Light-duty chassis-dyno testing (lab) Light-duty in-use testing (PEMS) 15

Compliance and Enforcement ENGINE AND ELECTRONICS GROWTH 2010 2013 1998 2002 2007 1991 1034 18 28 22 6

16 Compliance and Enforcement ENGINE AND ELECTRONICS GROWTH Sensors Actuators Pressure Temperature Position Chemical Exhaust Aftertreatment Actuators 16

17 Data and Connectivity DRIVER ASSIST / PLATOONING Daimler autonomous platoon demo March

Greenhouse Gas & Fuel Economy COMMERCIAL VEHICLE

Diesel, CNG, LNG Engines Brake Thermal Efficiency

Speed / Idle Controls Fleets / Operators

training & aids Highways / Infrastructure Highway

18 Greenhouse Gas & Fuel Economy COMMERCIAL VEHICLE APPROACH Fuels Reduced carbon intensity Bio Diesel, CNG, LNG Engines Brake Thermal Efficiency Improvements Vehicles Tires Aerodynamics Weight Speed / Idle Controls Fleets / Operators Deployment of Low GHG vehicles Logistics, Driver training & aids Highways / Infrastructure Highway Construction / Congestion Speed limits Increased GVWs, LCVs 18

19 Greenhouse Gas & Fuel Economy STAKEHOLDER COLLABORATION The Art Of The Possible 75% Fuel economy improvement May 21, 2010 August 9,

20 Greenhouse Gas & Fuel Economy WASTE HEAT RECOVERY 20

21 Greenhouse Gas & Fuel Economy WASTE HEAT RECOVERY 21

22 Future of Fuels CURRENT VIABILITY 22

23 The Power to be Part of the Solution Raw Materials/ Processing Production Logistics & Distribution Product Use End of Life PRODUCT LIFECYCLE 35,000+ SUPPLIERS 450+ SITES 190+ COUNTRIES 600+ DISTRIBUTORS 1,000,000 ENGINE SALES ANNUALLY 15,000+ REMAN ENGINES 6,500+ DEALERS Fueled by 54,000 employees and meaningful public policy and stakeholder engagement. 23

The Power of Cummins

The Power of Cummins A Rich History Rooted in Innovation Founded in 1919 by Clessie Cummins and W.G. Irwin Pioneered the development of diesel engines Promoted diesels as a reliable source of power Earned