I'm Ryan Brinkman, the US Autos Analyst, at J.P. Morgan. Very excited to get going with Dana, including James Kamsickas, Chairman and Chief Executive Officer, and Timothy Kraus, Senior Vice President and Chief Financial Officer. I'm gonna turn it over to Jim. I think he's got some slides, and then we'll have a chat.
Thanks for coming. Thanks for having us. Privilege of your time. We'll jump right into the presentation. Background, I'm pretty sure most of you know Dana a little bit. A 120 year, this year, marks hundred. We're pretty proud of that. We believe iconic global mobility supplier, of course, across all end markets. Anything that moves, we support and we supply. In 1904, $10.2 billion, 42,000 people, 88 major manufacturing facilities around the world, so on and so forth. You can see the kind of locations on the map. Just some background, all these should look relatively familiar to you. If you're following Dana, these are right out of previous either earnings presentations or other presentations. Of examples, I think we're starting to run out of drapes.
We wish we could tell you more of the vehicles, especially on the electrification side, that are coming through the pipeline, that we're designing, engineering, and about to manufacture over the next years. We're not gonna gun jump our customers, of course, so we don't do that. Probably the second most important thing you should take away from this is the proliferation of the products and the way we design the company in this transformation in 2016. We were all in, I think as you're well aware, when we did our enterprise strategy, refreshed it in 2018 and retained the courage throughout the per se, COVID era, 2020-2022, to make sure that we were completely energy source agnostic.
New energy, whatever it may be, hydrogen fuel cell, electrification via battery, internal combustion engine, it doesn't matter. Represented down here, you can see the various markets. If you take the school bus, is a good representative example, where there, in no uncertain terms, strong electrification, you can expect school buses, big picture, to be around electrified, around 75% by the end of the decade. It's just for all the right reasons. Again, taking it as an example, the use case relative to recharging throughout the course of the day, taking the emissions away from the school bus stops, et cetera, et cetera. We're in a really strong position, and for us, it's all about, I like to say sometimes, we don't sell parts, we sell capacity.
The way we've designed the company, we flex that capacity across the various end markets, across the various products, 'cause at the end of the day, there's still motors, inverters, gearbox, and then thermal management that surrounds the overall e-propulsion system itself. That's a good straight person into, into the kind of some architecture of how to think about an e-propulsion system. These are very generic, general ways of thinking about it. In the upper left-hand corner, you can see some motors. Those are kind of sort of standalone motors. We also design the motors, where you have the enclosure actually integrated with the axle itself. Not gonna belabor that issue, but when you think about electrification, big picture, think about it in low voltage applications and high voltage applications. That goes as well for the inverter side of the business, which is also in-house.
Then, if you continue on, you will see on the page that besides that, we also do the controllers and software, which brings it all together 4-in-1 system. what, again, is the fourth piece of the system? It's the thermal management piece of the business. When thinking about how are we going to transform the company, how are we gonna ensure that for after the first 20 years, what's the next 120 years look like?
We took those extremely talented people in our Power Technologies group that had done ceiling thermal management for the traditional diesel or internal combustion engine products, and said to ourselves: "These are exactly the skill sets that you need to do battery cooling, electronics cooling." Arguably, I wouldn't even say arguably, much more important is the actual thermal management in the system of an e-axle or an e- e-propulsion system. Very critical as it relates to vehicle capability, torque, payload, battery utilization, et cetera, et cetera. The plan's coming together, as the markets are pulling forward, and that's probably a good straight line for this, which is sort of the per se breaking news coming out of our, I guess, it was April earnings, or no, excuse me, July earnings presentation. There was a lot of questions early on.
What would happen with e-axles? Will they be independent? Will they be rigid? Will they be insourced, will they be outsourced? We had strong conviction then, we have strong conviction now. It's not about conviction anymore. The story has been told. You don't need to go get consultants to figure it out anymore. Trust me when we say, you can't make this stuff up. We're not gonna come in front of an audience and say we're gonna be on future generation, pickup truck programs in North America with e-propulsion systems. In this example, I can't. Again, I can't give you the customer, and I can't give you the specific products and systems on it, other than to say of the 4-in-1 system that I just spoke to you about.
At least three of the four will be on this system, and they're always different, no matter which application we're using. Again, I'm gonna remind you that we may be doing 3 to 4 in one systems, anywhere from golf carts and stand-up lawnmowers, all the way to high-end e-electrified construction equipment, such as front-end loaders, so on and so forth. We scale it, scale it not only on the, on the equipment, but also on the human capital. In an update, I guess, this, we presented this, we said we were going to. We presented it at the ACT conference out in Anaheim in May. It's kind of just filling out the full suite of what we believe we need to have to be successful.
By successful, I define that as having all of the capabilities, depending on the use case, depending on the end market for all of the mobility markets which we support. This is the last piece of it. It's the e-transmission or the transmission portion in the commercial vehicle segment. As we've talked about in the past, we are not a passenger car supplier. We're not in the Class A, B, C, whatever. We never have been, other than some of our Power Technologies products, but we are in the super sports car business for a lot of good reasons. That's Aston Martin, Lamborghini, so on, so forth. You can see that on the upper right-hand side of the slide. Obviously, a big transmission supplier. Therefore, you're a transmission supplier in off-highway. Adding to the kind of portfolio products is the last piece of it.
We did that because we're able to scale the technology, scale the people, scale the components, scale everything across, and that puts us in a position to have a, an application that fits really well in the commercial vehicle segment, when it's not going to be a rigid e-axle application. Backlog, just again, just to remind you of what we, I guess, we communicated to you in February. I guess, without going through the whole page, you can see the actual, it's the, the table sort of tilted per se, 65% of the backlog now is in electrification. It's just where the market's going. When you think about what we call the RFI, then turn into RFQ, so on and so forth, that is our business. That is what our engineers are working on. That is what people are doing.
The internal combustion engine, diesel engine, will be here for years to come, decades to come, but there's gonna be a balance, and we're in a position to be able to balance that very, very well. The other thing that could be a question for anybody in an audience could be, well, what's the confidence in this backlog? I'm not sure you're gonna find a company that could probably stand up and say, I think proof is in the pudding more than Dana. As you may know, $5.8 billion in sales in 2016. We're now guiding to $10.7 billion. That's an 85% increase in growth over a course of 7 years. That's not a victory lap, it's a fact.
It's about customer satisfaction, it's about having the right product technology, and it's about being able to launch and execute accordingly, which we've had some great launches again this year, and a year of a record-high 120 new program launches across Dana Incorporated. Just some real quick information on the operating environment. You know this as well as I do. Big picture on the commodities and, and currency and the commodities. Obviously, the steel has came down compared to last year, just not quite as fast or as, or as much as we thought it would, so there's a little bit of headwind there compared to what we expected.
Overall inflation and operational costs, but fortunately, and they've done a really nice job, our customers continue to get a little bit better and a little bit more stable every day, you know, not just from what they can control, but what can others can control, the balance of their supply base, whatever their other challenges are. You can see that, I'm sure, in some of the other people that have spoke today and yesterday. You know, just so you can see it in the numbers, it does matter in terms of running a, a complex manufacturing company, but things are headed in the right direction. Good line of sight there. Then, of course, over on the market demand and, and new business, I would say the best word for it across all our markets is steady state. Steady state would be a good number.
I don't see any really crazy green shoots that volumes are going to go dramatically higher, but I also don't see any line of sight that there's gonna be some significant pullback for one reason or another. At least not, as you guys all know, or all of you know, is, is that we look at our material issues and customer forecasts, et cetera, and so we got a pretty good steady state for some period of time in front of us. Last but not least, just sort of an outlook, as you know, Tim took you through in the earnings call, I guess it was in July, is, is that we've, you know, we've raised the guidance for our midpoint up to $10.7 billion. That's obviously a $545 million increase over the prior year.
Feel good about that. You can see why in the bottom left, some of the drivers, not just for the short term, but the long term. You look at EV products, we're about $700 million of sales this year in EV products. We raised our guidance from $800 million- $850 million. As you recall, we were $700 million in EBITDA last year, so that's a 20%. If we land on $850 million, that's about 20% increase over the prior year. We also raised the midpoint for free cash flow. I moved it from $25 million- $75 million. Obviously, for all the, all the reasons, not only the profitability, but also the efforts that we're putting forth on working capital.
On the upper right-hand side, you can see some of the other industry trends. There's certainly some inflation concerns and order, order pattern, but I think we're navigating those quite well, and then profit and free cash flow, everything that we've already talked about. With that, I purposely made it quick. I hope that was okay, and I guess I'll move it back to the table, if that's okay, Ryan?
Absolutely. Thanks so much. Thanks for the overview. I heard you comment on stable end markets. That was my first question, so thank you for that. Next question, I wanted to delve a little bit more into the supply side. I did catch the late 2Q improvement comment. Maybe just to follow up on that, what do you think is driving the improvement? And, and then also, you know, here we are in the middle of 2023, you know, where do you think we stand relative to the semiconductor chip shortage, port delays, labor availability, or any of the other various different supply chain bottlenecks that had previously impacted the level and stability of customer production?
Well, there's a lot to unpack right there. Thank you. I pretty much just told the year of the, the story of the COVID era, right? 2020- 2022. You know, from our standpoint, you know, there's the, the microchip issue isn't completely gone, but it's nowhere close to what it once was. Overall labor stability, overall supply stability, much, much better. You obviously see that now as you cascade that into our customer's ability to run more consistently, putting what we call releases in the business schedules, whatever you wanna call it, predictable, so you're not sort of guessing at it by the day. At some times, over the last couple of years, it was almost by the day as to what were we gonna produce. That creates, needless to say, an incredible amount of operational waste and other factors.
You know, big picture, we see a lot of stability. Nothing's perfect. I'd say it's a little bit different by not only end market, light vehicle, commercial vehicle, off-highway markets, but also by customer and also by vehicle, geographical reasons. I, I hope I don't get redundant getting to this point, but I will tell you my view, 2020 to 2022 is the best thing that ever happened for a manufacturing company, one still relying to it, because if you were ever curious as to where your opportunities were to improve your operations, your systems, your controls, so on and so forth, that was it. We navigate much better in the world. Take your example, Ryan, sea container management, et cetera, et cetera. It was just stable. It just kind of did its thing. Now, I think we're all getting better at it.
Great, thanks. Next, I wanted to ask on the backdrop for operating margin for suppliers generally. EBITDA margin for the 12 suppliers we cover averaged 11% last year. Maybe it'll be 12% this year, but it was more like 13% or 14% before the pandemic. So, you know, considering all the various different industry and macro factors that roll up into the backdrop for supplier margin, such as the aforementioned level and stability of customer production, the timing of commodity and non-commodity inflation and related recoveries, also the needed spending on R&D to support industry change ahead of the revenue. You know, where do you think we are on the path back to what was a normal type backdrop for industry margin?
Are, are we headed to a new normal, where you have structurally higher input costs, even if fully reimbursed, would result in lower, you know, optical margin, even if the same, you know, EBITDA dollars, thus suggesting maybe we should look at return on invested capital or, or another performance metric?
Yeah, Ryan, I think, you know, your last comment, I think, is where, you know, at least for the foreseeable future, the industry is gonna be. Even in situations where we're recovering every single dollar of the inflationary costs that are impacting the business, you know, they're gonna result in lower mathematical, you know, percentage margins. I think that persists for quite a while. Your point, you know, the place where we're really concentrating is making sure we're getting the program economics to where they were or better than they were prior to the pandemic. That's really the focus, 'cause I think that's where you see the value being driven into the business and for the shareholder. To talk a little bit about a couple of your other points.
You know, we're continuing, you know, I can't speak for the industry as a whole, but, you know, we're continuing to invest, you know, sizable amounts in our EV build-out. This is not just engineering, but, you have to think about it in terms of building an entire business from the ground up. So program management, purchasing, all the things that go into building, what we believe will be a $3+ billion business by the end of the decade, really does come with, with a lot of upfront investment, both in capital and in, in OpEx. As you probably saw in our second quarter, you know, the, the, the business, the EV business on a contribution margin basis is profitable. You saw that both first and second quarter.
A little, little bit of profit peeking through due to some timing of when the spend came in and whatnot. For the full year, we still expect the incremental business to be at a loss of about $20 million. As the business grows and some of the core investments start to level off, or at least the growth in that investment level off, we think by 2025, the business is break even, and then after that, a contributor to profit. Longer term, we think we're on a good path to getting our overall margins back to double digits. Obviously, the performance in the business this year, it makes us even more confident in our ability to deliver that.
Great. Thank you. How are you thinking about the upcoming UAW negotiations? Is there anything you can do to help mitigate the risk around that? I mean, maybe there's not a ton. I mean, right off the bat, half of your business is not impacted, right? How do you go about thinking or how do investors understand the percentage of your revenues that could be exposed?
Well, I'll take the first thing. Thanks for the question, Ryan. I'm gonna have to reinforce the fact that, you know, Dana, that is, it wasn't by accident, it wasn't by happenstance, or a lot of people that asked the question early on in my days at Dana about my being in markets and all that other stuff. Exactly one proof point as to why there's a value add in doing that. We're pretty well split between 50% light, 50% heavy duty business, and then even in the light vehicle business, and that includes both Power Technologies and light vehicle. I mean, obviously, there's only a percentage of that that's gonna be in the United States of America that could be impacted this. We still have plenty of operations supporting light vehicle in South Africa and Argentina and Thailand, so on and so forth.
It's gonna be something significantly less than maybe a pure play. Relative to how you manage the business, if somebody's talking about a playbook, that's kind of ridiculous, because if you don't have a playbook on a flex cost, you, you shouldn't be in the business in the first place. We've all lived through this many times. I hate to bring it up, but we all lived it in COVID. We lived it through different other labor issues over our collective careers, careers, to how to flex labor quickly. We will, we'll flex labor, we'll flex other overhead costs the best we can. Again, a good chunk of our business is still gonna operate as is. Tim?
No, I think that's pretty much it, right? Obviously, you know, we, we tend to deliver, you know, axles, you know, products just in time. There's really no opportunity from our perspective, to, to pre-build. We'll have to continue to monitor the situation, and, and we'll, we're, we'll react as, as Jim mentioned, based on the playbook that's, you know, pretty tried and true. We'll, we'll take the, the costs out that, that are, certainly direct, and we'll continue to work. Some of it depends on, you know, what's the, the overall backdrop. Do you think it's gonna be prolonged or, or, or relatively brief? We'll, we'll continue to monitor the situation and we'll react accordingly.
Thanks. I wanted to ask about what you're 4-in-1 systems. others might call three-in-one system. I think some of the others who have the thermal capabilities call them three-in-one, you 4-in-1. on, on the other hand, there are people in this market who don't have the thermal capabilities, so there is clearly some distinction there. I was just curious, the extent to which your ability to, you know, thermoregulate, you know, the power electronics, et cetera, helps you sell the power electronics. You know, to what extent does selling the power electronics bring along the Power Technologies thermal management, and there's some sort of revenue synergy there? Talk a little bit about, you know, if, if they make each other better and if they kinda help each other out in terms of, go-to-market.
Yeah, thanks for the question. So an easy way for me, I hope, anyway, to visualize this for the audience, is to think about the business, right? If you rack and stack, you by now, you're aware that we're doing the full battery cooling for the Ultium platform or GM, or we're doing the Ford Lightning or the Rivian and other customers, so on and so forth. We do electronics cooling across the board, both for our internal products as well as for other customers, so on and so forth. Then the other piece, the Power Technologies, thermal management piece, is all of the thermal management around the e-propulsion system. If you'd asked me to rank which one was most important, it would be the latter.
If you go ask any technical person as it relates to propulsion systems at OEMs or whatever the case may be, I will almost guarantee you they will say the thermal management around the e-propulsion system is, if not the most critical, one of the most critical factors in terms of driving performance, in terms of risk mitigation, in terms of torque, in terms of efficiency, in terms of alignment as it relates to the battery technology, and so on and so forth. It is mission critical for us. Not only... Not to mention, there are components within Power Technologies that go within the motors.
There are components within the Power Technologies group, the thermal components, which obviously go into the inverter, such as, most important, I think anyway, the most important product with inside of the product of the inverter is the power module. By the way, we cool the power module. I can't really speak for why our, maybe our competitors, if they're competitors, or don't call 4-in-1. i can't imagine why you wouldn't call 4-in-1. it's the most important tip. It's kind of the tip of the spear, the way I think about it.
Great, thanks. I, I guess we've come a long way from, you know, 5+ years ago, when it, it was deemed Power Technologies to have the, the least strategic coherence. We're hearing it's, it's critical. Maybe just to break down Power Technologies, though, are there, are there elements within it that are more internal combustion? I don't know, maybe the, the sealing business-
Mm-hmm.
does strike me as a little bit, fuel, liquid fuel related, but we had Cooper Standard up here.
Mm-hmm.
earlier today, and they were talking about how, you know, they handle liquid within the car, and do some sealing, and they love the EVs because of all of the glycol and what not. Maybe just talk about the leverage of, you know, obviously, the battery cooling plate is, you know, very levered to EVs, but what about the rest of Power Technologies?
Yeah. Well, Cooper Standard did me a big solid and took care of my answer. No, no, seriously, it is. It's core. I guess the way to illustrate it for you is if you, if you ever are at Dana or at another place where you've done a product teardown, I think that's the right way to think about it, and you reverse it, you engineer and tear down a motor. There's sealing within, within. If you think about... Let's go to the hydrogen fuel cell. Many of you know, maybe you don't all know, that we do the inter-cell cooling plates and thermal management plates inside of a hydrogen fuel cell stack for commercial vehicle. In fact, it's coming up pretty strong in the back half of this year in terms of volume increases there.
All the technology is tied into both thermal and sealing, but even more towards the sealing side of our capabilities than it even was the thermal capability. So you're not, you're changing the capacity utilization from something that looked like a gasket to gaskets on e-propulsion systems or the sealing technology, in this case, on the hydrogen fuel cell. So it there are plenty of applications. Again, besides that, it's really the depth and technology.
Maybe talk a little bit about battery cooling, battery cooling plates. I'm not sure if it's the plates that you're doing, but I know you're doing... I think you're doing the battery plates on, on Rivian, Lightning. I don't know if you're just doing battery cooling generally on, on Ultium, for that's the plates as well. But it seems like you're... I don't know if you have a market share estimate, but it seems like you might be quite a bit out in front on the, the battery cooling, or at least the battery cooling, plate side, of the house. How, how do you view your competitiveness there?
As Ryan, you were alluding to or inferring it, it's really difficult to do the market share breakdown. I think we all know that. What I would tell you is, the way I think about at least leading the company, is I only want a third of the business. You're always gonna have two competitors in the business at least, right? And with high confidence, I can tell you we're one of the top three. You know, the programs you referred to, we're also doing. Just in another example, coming into production, we're doing the Jaguar Land Rover products, so on and so forth. Definitely is a core business to us, across the board.
Okay, I saw on the, the 2Q call, it was specifically called out that battery cooling product sales would benefit in the back half of the year, versus the first, from higher EV volumes. I think that does speak to the fact that you're on so many products, that you just have this broad leverage, to EVs. That being said, while EV volume will pick up from the first half to the second, there's no doubt, and I, I'm sure that'll be that way through the end of the decade, pretty much. There was some discussion on a, a couple, well, on Ford's call, on BorgWarner's call, about maybe EV uptake or adoption, while sequentially improving, possibly being less than was expected. I'm curious if you're also seeing that. I know you're gonna see a tailwind sequentially, but, what are you seeing in terms of EV, you know, production or mix of sales or production, in the back half or generally relative to maybe what could have been expected?
Yeah, I, I think we may have talked a little bit about Ryan and our earnings, that may be a little bit slower. Our PT, our Power Technologies, sorry, our, our numbers are a little bit softer than maybe you would have thought, although I you know, I still feel pretty good about the year. There's a little bit of that in there. I, I can tell you that I don't lose a lot of sleep on it. The Lightning, you know, I think the volumes, you can say it pulled back, but if you'd have gone back 3- 4, 6 months ago, you know, the uptick in terms of where they were going, they've, they've designed and engineered and manufactured a great vehicle there. Over the long haul, I think the, the volumes will be there.
I don't think that's what you're getting at, Ryan. I would just tell you that if you just think about the business for a minute, in 2019 in the U.S., just take the U.S., right? EVs were 1% of the market. We know that. Now they're, what? 7% of the market. We know year-over-year, there's a 50% increase from last year to this year. The demand will come. We will continue on EV. We will continue to see this thing, right? I've been doing this way too long. You're gonna see this ebb and flow that we know for the last 5- 6 years, that demand has outstripped production as it relates to EVs. Maybe production's capacity is gonna outstrip, you know, demand here for some period of time. That's all gonna work itself out.
I think we're at the very beginning of the journey, especially for Dana. Remember something, we are not the Pascal. That's not where our focus is. We have some Pascal products on the battery cooling side, we are the truck side of the business, right? That, as well as commercial vehicle and off highway. Those markets are gonna come through, the way we've designed the company, this isn't by happenstance or accident. We've designed the capital to be flexible, if one end market moves a little bit faster, i.e., last mile delivery vehicles, one doesn't, I don't care whether you pick it with me. You know, could be in the agriculture space. One way or the other, we can flex the capital to meet the demand. That's how we're doing. That's how we're managing it, at least on Dana's side.
Okay, you announced at the Advanced Clean Transportation Expo, a family of e-transmissions across 3 different end markets. I mean already you've got this in production today, right? On very high performance light vehicles, hybrids from Ferrari, Lamborghini, McLaren. Also, I think it, it's relevant for these non-light vehicle applications, possibly for EVs in addition to hybrids. Maybe just talk about what e-transmissions are, how they compare to e-beam or 4-in-1 EDU.
Mm-hmm.
Which approach do you think will gain the most popularity?
Wow, that's a big question. I'll do my best on it. First of all, it, it depends on end market, so I'll do my best here. If you think about like, is the let's take commercial vehicle for a minute. If you think about commercial vehicle, maybe the, the transition might be a little bit slower for the reasons we know, right? In terms of you got to go, maybe drive across the United States or whatever the case may be. Is it return on, return on investments? I don't like to speak for my customers, but if you're speaking for my customers for a minute and they're looking at, is there a better way to kind of reconfigure and reverse engineer, staying more with the, you know, the historical diesel vehicle, but then adapt it to electric vehicle?
In large portion, it's quicker, often more cost-effective to go to an e-transmission versus going to the full-scale e-axle, which now is a completely rigid axle that goes across. It takes more time. At first, there's a speed-to-market play, which is a good reason for us to have that in there. As it relates to the adoption, though, most of the time you look at that, it's kind of like even on an internal combustion engine wheel, if you're not looking for significant payload or stuff like that, you know, you're usually going with an independent type version, which is closer to a transmission. If you're going to need, like on a Jeep Wrangler, in our case, or a Super Duty, Ford Super Duty, you're gonna need a rigid e-axle.
Those applications are gonna be similar, like for like, with a rigid e-beam, no matter which application we're doing, either in light vehicle, commercial vehicle, or off highway. I know there's a lot to unpack there. I hope I answered your question, but it that's a long, that's a long that's a deep hole I'd have to go into.
Yeah. Well, maybe just to follow up-
Yeah
... because, you know, there are so many ways. It's kind of dizzying to keep track. I guess we could add to the mix. There is also the in-wheel, like, hub motor.
Yeah
... too. You know, I remember, it was a different company, but they, they talked about how they want to be seen as a, a trusted powertrain-
Mm-hmm
... consultant or advisor. You know, you know, some, some people might go in and, "All we've got is the hub motor, all we've got is, the e-beam axle." Of course, we're trying to push that solution on the customer, as opposed to collaboratively working with the customer to determine, you know, which is the, the correct one in this particular application. You, you seem to be one of the suppliers here who's covering the most bases.
Mm-hmm.
Is... What, what are the merits to doing that? And, and, and do you specialize in, in one approach versus the other? I asked, I asked this of American Axle yesterday. I said, "Well, you have the word axle in your name. Does that mean you're better at this one or the other?
Yeah.
They said, "No, no, no, it doesn't mean that." I don't know if, if, if you, if you have a, a preference here, if one is better for you, more content per vehicle or something like that, or more profitable. Even though you've got a preference, you, you don't wanna push it because you, you feel like you, you can get more business by being more open or flexible. I'm just thinking specifically by adding...
Mm-hmm
... e-transmissions now to this mix.
Yeah. I wish, I wish, I wish, I wish I had a choice. I don't have a choice. At the end of the day, my customers have a choice. It's a use case question, right? They, they fill in the blank for what it is, depending on fuel efficiency, range of, of battery, all the different things that come into the equation or speed to market, like I referred to in a minute. The way we think about it, though, is it doesn't matter. You know, yes, we're three end markets, but we're, we're one axle company, one transformation, transition company. We, we, we drive all those products up and down the rivers, I like to call it, anywhere from bracketry to PCB boards to whatever the case may be. So whichever they wanna go, it doesn't really matter to us.
We've had lots of discussion in in-wheel technology. Oh, by the way, we do in-wheel technology. We do it every day, twice on Sunday in the off-highway market. If you think about the aerial work platform, okay, someone could say, "That's not tech," but it's still technology. It's still Literally, you're still putting a motor, you're still putting an inverter, you're putting it now to a planetary hub drive, and then you do that. There has not been the right application yet in commercial vehicle or in light vehicle, in the space that we participate, by the way, where you need payload and so on and so forth. Maybe someday it gets there. If it gets there, we'll come up that technology roadmap. We'll be able to provide it. Just that that is not where it's at, not in the markets we participate.
... Okay, you know, I, I think, part of the in- the investors see their job as partly understanding two factors and then how they net together. Maybe we can talk about that, focusing first on light vehicles. The first factor is, like, what's the content per vehicle that this company is going to make in an electrified solution versus a, a purely internal combustion solution? Then they say, "Well, that's just half the job. I have to take into account what's the degree of, you know, insourcing that the light vehicle OEM is going to engage in that will partly negate?" I think they think differently for different companies, might be more than entirely negate the CPV uplifts. You know, where, where do you stand when it comes to light vehicle CPV uplift? Then, how do you think you fare in insource versus outsource?
I'll, I'll take this one. You know, I, I think when you really think about the, the change in the vehicle, right? Powertrain, you're losing the motor, the transmission and the driveshaft, and really all that, all that power content's moving back onto the axle. From our perspective, where we're 4-in-1 system, it's upwards to about 3x content per vehicle uplift. If you think about it, you know, it's, it's a, you know, it's an axle, the, the motor, the inverter, and the, the cooling all, all packaged together, so it's about 3x. When you think about, you know, some of this is going to be insourced, some of this will remain outsourced.
You know, what we're seeing and, and, you know, I think the, the win that we announced during our, our call for North American OEM is the place we play in, which is rigid beam axles for large trucks, SUVs, where there's, there's really a, a, a high duty cycle, a lot of technology, a lot of variability, lower volume, but more technology. It's no different in EVs as it is for our ICE vehicles. As these ICE vehicles as the customer has outsourced those lower volume, higher complexity axles to companies like Dana, we believe the same thing's going to happen in the EV world.
We're seeing that bear out with some of the announcements that have come out over the last few months, including ours here just a couple of weeks ago. I think, for us, you know, it, you know, as these vehicles transition, we'll, we'll, we'll lose ICE volume, but we'll gain the EV volume, and that volume will come with about 3x the content. Now, of course, it depends, you know, which mixture. Do you have the motor and the inverter and the hard parts? That's pretty much how we're thinking about it. It's a really big opportunity for us in, in terms of, of, of the growth profile for the business, especially in light vehicle.
I think there's a broad sense that as we try to do the same math problem on the commercial vehicle side, that it's going to net out more favorably for Dana. On the one hand, maybe you can talk about what the CPV uplift on CVs is as opposed to LVs. Is that where the opportunity is? I, I think it's, it's, it's, it's really looking like the, it's the light vehicle OEs that are wanting to engage more in the insourcing than the CV OEs. Is that the case? Why is that the case? Does it have to do with unions? I don't know. Or just their perceived ability to do it themselves? How does that calculus sort of net out for you on the CV versus LV side?
Yeah, no, I, I think it's pretty much this. It's a very similar dynamic for, for some different reasons. I mean, if you look at CV, you know, some of that market's outsourced today, you know, or, or a lot of it's insourced today. We don't think that changes. The, the CV truck manufacturers who have historically been outsourced on their axles, you know, they have a lot of other things to think about in terms of investment that they need to make, and, and they're not going to all of a sudden move to insource the, the axles. We think that continues to be out, and same dynamic on, on content per vehicle, you know, works in this, the, the CV world as it does in the light vehicle.
We're picking up a motor, inverter, power electronics, cooling content on those vehicles, the same as we would for, for a light vehicle. I think there, you know, you, you also have. They want to get to market quickly, right? They want those solutions. We, we today make, you know, we, we assemble the full battery electric vehicle for, for PACCAR, because PACCAR wanted to get to market quickly.
Now, that doesn't last forever, but what that also puts us in is a very key position with a key customer to, when they start to build, you know, EVs on their own lines, they will take a fully integrated e-axle from somebody like Dana and know that we understand the architecture within that, that full vehicle and be able to give them a solution that's optimized for what they want. It's a huge opportunity in terms of growth for Dana.
I wanted to ask, what has been the impact on your business, if any, positive or negative, maybe some positives and some negatives?
Mm-hmm.
of Cummins' acquisition of Meritor?
I think your indirect tone there was right, Ryan. It hasn't really had any impact. I mentioned when it came out, a few, few of you probably asked me the question, and to me, it's a change of name on the wall. It just really is. You know, we're always going to have. Not to overcook what I said a second ago, we're always going to have 2 to 3 competitors in the space, and, you know, they're a good competitor. You know, we're doing our thing. We're doing our thing, leveraging technology, leveraging operational excellence. I've said it before, so I'll say it again, we're taking market share in that market.
You see that our trajectory in that business, we're going to head right back to where our historical numbers are once we get stability in operating environment, so on and so forth, which is already getting better. I'm not too worried about the competition. I'm worried about us, and we're going to make it happen.
Very helpful. Thanks. Are there any questions in the audience for Dana? Jim Urban, Moon Capital. Got the microphone on its way. One sec, one sec. Thank you.
Hey, good to see you guys.
Hey, Jim.
Just wanted to kind of double-check on, as you're expanding the $3 billion in kind of the electrification space over the coming 7 years, and you walked us through that breakeven glide path. When you think about your carryover business on the traditional propulsion system, if the EV portion is moving faster or slower, your ability to right-size the manufacturing footprint...
Mm-hmm.
so that you hit your targets on your ICE exposure
Mm-hmm.
whether it's commercial off highway. I just, I just want to kind of get your thinking on that.
Yeah.
2025, 2026. I, I don't know if you're really thinking about it that way?
Oh, for sure.
It's, you know, the flexibility of capital, but I'm also thinking the flexibility of manufacturing. You, you got a lot of, you know, flex between the two different...
Yeah.
Simply defined. Kind of walk me through that. Also remind me, you know, historically, it was low double-digit margin targets, right? Is that something that you think could be beaten? Actually, it'll be tough to hit, you know, on your core business today. It's a little convoluted question. I think you get the gist of what I'm getting at.
Yeah, on the, on the margin question, I'll take that one first. Jim can talk a little bit on the manufacturing side. You know, I think, you know, we, we have a we think getting back to double digits in the, you know, what, what today is, you know, pretty much an ICE business is, is still in sight. We're, we're more confident today, given, you know, where we're at now and where the, the business we took, we're taking guidance of. Getting to those, you know, double-digit margins, you know, by 2025, I'm, I'm more confident today than I was in February, that, that we're on a glide path to be able to deliver that and, and, you know, the same or better, you know, you know, return economics on what we have invested in the business.
Yeah. Do you need any additional operations?
Yeah, let me, I'll.
Flexibility building on the patient side.
Yeah, I'll take that on the manufacturing strategy side. The, the way that we think about it anyway, is that let's go to world-class operations in general. What's your sequence of what you need to have? First, you need to have outstanding customer performance on delivery, quality, warranty, et cetera. You have to have a, a, a kind of a ninja approach on cost management, constantly taking out. The world-class companies are also managing manufacturing strategy and floor space utilization. We are definitely in the culture and in the, in the mode of we're constantly focused on floor space utilization. With our growth trajectory out there, then the second question is: Will you have the ability to repurpose your traditional ICE factories to be able to manufacture electrification product? We do it every day right now.
We already do it around the world, and we're going to continue to do it. Here's the key point to that: It is a huge competitive advantage to do that, because manufacturing is still manufacturing. I don't care if it's a motor, if it's an inverter, if it's battery cooling, or if it's traditional mechanical products like we do. You think about some of the startups that have had trouble and so on and so forth. That's why they have trouble, right? You got to have that institutional knowledge. You have to have depth in manufacturing, but everything that leads up to a program management, engineering, so forth. The way I look at it, moving forward, we're going to continue to continually improve by having floor space utilization benefits, the way we focus on, focus on that in the company.
We get to the end of the year, we're going to grow that $3 billion-$4 billion, whatever it's going to be, and we'll be largely in a, a similar floor space or, or footprint to what we have today. We, we have high conviction that we'll, we'll get there. Team's doing a remarkable job. Thanks.
Any other questions? All right, well, it looks like we are out of time, so please join me in thanking Jim and Tim for all the great color and insight.
Okay.