Hidden within the usual Wall Street jargon and analyst scrutiny, Dana Incorporated's Q1 2024 earnings call unveils a surprising trend: the company's extraordinary flexibility in navigating the volatile landscape of electric vehicle (EV) production. While others struggle with fluctuating EV demand, Dana is quietly demonstrating an adaptability that could propel it to the forefront of the EV revolution.

Strategic Focus and Adaptability

The transcript reveals three key insights into Dana's strategy:

1. **Avoiding Passenger Car EVs:** Recognizing the volatility in passenger car EVs, Dana has strategically avoided this segment, focusing instead on their core strength: supplying components for light trucks, commercial vehicles, and off-highway machinery. 2. **Flexible Component Arsenal:** Dana boasts a versatile arsenal of e-mechanical, electrodynamic, and e-thermal components designed for flexibility across vehicle types and mobility markets. This enables them to shift resources and adapt to changing production timelines and volumes. 3. **Staggered EV Program Launches:** Dana's light vehicle EV program launches are staggered over the next few years, providing flexibility to adjust capital equipment spending in response to market shifts.

Profitability in the EV Market

As a result of this adaptable strategy, Dana anticipates EV sales to reach approximately $1 billion this year, generating positive contribution margins. They are on track to achieve positive EBITDA margins in 2025.

Dana's EV Revenue Growth

The chart below illustrates Dana's projected EV revenue growth from 2023 to 2024.

Collaboration and In-House Capabilities

Dana's success is fueled by:

- **Collaboration:** Dana's Automotive News PACE Award win for their Electro-Mechanical, Infinitely Variable Transmission system (EMIVT), developed in partnership with Oshkosh, exemplifies their collaborative spirit. - **In-House Capabilities:** Dana's focus on developing complete in-house capabilities across their EV portfolio allows them to control the entire development process, ensuring quality, flexibility, and rapid adaptation to customer needs.

Is Dana Cracking the Code for Profitable EV Production?

Dana's strategic focus on specific vehicle segments, commitment to flexible in-house capabilities, and measured launch schedule suggest a deliberate and well-executed approach to EV production. While the transcript doesn't provide specific figures for EV profitability, the positive contribution margins and anticipated positive EBITDA margins next year suggest a healthy trajectory. Dana's adaptable approach to EV production could be their secret weapon, allowing them to thrive and potentially emerge as a leader in the evolving EV landscape.

"Fun Fact: Dana invented the first universal joint (U-joint) for automobiles, paving the way for modern driveline systems. This history of innovation positions them to lead the next generation of drivetrain technology."