Diesel Is Dead, Long Live Diesel: What Is Next for Volkswagen, Traton, dynaCERT, and Cummins

Volkswagen: Why the House Is on Fire in Wolfsburg

For decades, Volkswagen was considered the flagship of German industry. Now CEO Oliver Blume admits that the previous business model—developing in Germany, manufacturing in Europe, exporting worldwide—is no longer sustainable, at least not for all of the group's brands. Top management is openly considering plant closures. According to media reports, four German locations are on the chopping block: Hanover, Zwickau, Emden, and the Audi plant in Neckarsulm. Up to 100,000 jobs could be affected, which equates to roughly one in six jobs. This has nothing to do with a temporary economic dip; the Wolfsburg-based company is in the midst of a full-blown structural crisis. The operating margin fell to a meagre 2.8% in 2025; China has gone from being a beacon of hope to a source of concern; US tariffs are eroding margins; and the hard-won transition to electric vehicles is finding buyers more slowly than anticipated.

For investors, however, the temptation is strong: the stock is trading near its five-year low, making it look like a bargain. But a low is not the bottom. As long as it remains unclear where the restructuring will end and what it will cost, any investment is like catching a falling knife—or worse: a bet that there will not be any more bad news. The seemingly attractive price-to-earnings (P/E) ratio of 3.9 for the DAX-listed preferred stock is also on shaky ground. Analysts may recalculate and revise their earnings forecasts downward. It currently seems more worthwhile to look one level down: at the commercial vehicle subsidiary Traton, in which Volkswagen holds a nearly 90% stake—the healthier business within the ailing group.

Traton: Trucks Leave Porsche and Co. in the Dust

Although the stock is also cheap with a P/E ratio of 7.5, it is valued significantly higher than VW. And quite rightly so. While even luxury brands like Audi and Porsche are struggling within the VW Group, the commercial vehicle manufacturer's adjusted operating margin stood at 6.3% in 2025—more than double the parent company's 2.8%. There is no talk of plant closures here. The Traton stock is holding up well above the EUR 30 mark and thus also above its initial price of 27 EUR following its initial public offering in June 2019. VW shares have lost about half their value since then. However, this strength is relative, not absolute. For the subsidiary, too, 2025 was a year of decline: Revenue fell by 7% to EUR 44.1 billion, profit attributable to shareholders plummeted by 45% to EUR 1.55 billion, and the dividend was nearly halved. Here, too, US tariffs weighed on the results, and the American brand International Motors (formerly Navistar) fell short of expectations. However, the signs point to a turnaround. In the first quarter of 2026, order intake rose by double digits, and orders outpaced deliveries—a classic leading indicator of an impending increase in revenue.

The fact that Traton is not merely waiting for a recovery but is actively working to resolve the underlying structural issue is evident at the MAN main plant in Munich. For the past year, battery-electric heavy-duty trucks and diesel models have been running on the same production line there. This saves on investment costs, keeps production flexible, and allows the fleet to be modernized in step with actual market demand—rather than betting on technology decisions that policymakers have not yet made. Yet heavy-duty road transport should actually be the tougher problem, for reasons rooted purely in physics. A passenger vehicle can, if necessary, be fully electrified; a 40-metric-ton long-haul truck with daily ranges exceeding 1,000 km cannot—at least not yet. This raises the question: replace or improve? And who will bear the cost during the long years in between, while the existing diesel fleet continues to operate anyway? There is someone who has a plausible answer to this.

dynaCERT: A Suitcase Full of Solutions

That someone comes from Toronto - dynaCERT is a company still largely unknown in this country, whose motto is "you do not have to replace anything." The business model is based on a suitcase-sized box that can be installed in trucks already on the road with minimal effort. The specific approach: do not replace the engine—improve its combustion instead. Inside the unit, distilled water is broken down into hydrogen and oxygen; both gases enter the diesel engine's air intake system, where they ensure more complete combustion—specifically, less unburned fuel, lower fuel consumption, and better emissions. This requires neither stopping at hydrogen filling stations nor making any other detours. The system operates "on demand" in the truck, as the trendy phrase goes. The company estimates fuel savings and a reduction in CO₂ emissions of up to 10%. For soot particles—the dreaded fine particulate matter—improvements of up to 55.7% were measured, and for nitrogen oxides, as much as 88.7%. The technology is not new—it has been around for years. What is new is the commitment to marketing it professionally. Since April, the company has been led by Kevin Unrath, a manager whose mission is to drive the monetization of the business model. An initial production order from Vietnam, preceded by a successful pilot program, shows that the new strategy is beginning to take hold; in addition, the devices have been installed in trucks and container forklifts at one of the world's largest port operators.

The first source of revenue is the sale of box-based solutions; the second is the trading of CO₂ credits. A telematics unit, a system for collecting data within the vehicle, called HydraLytica™, records the fuel saved and, consequently, the emissions avoided. The underlying methodology is certified according to the standard set by the climate protection organization Verra. However, the Canadians themselves describe access to the global certificate market as a future possibility rather than an ongoing business. Current revenue comes from the patented devices marketed under the brand name HydraGEN™, not from credits. dynaCERT is still a micro-company whose shares trade on its home exchange in Toronto for around CAD 0.13 (EUR 0.08 in Germany). At CAD 60 million, its market capitalization is a fraction of Traton's valuation of around EUR 16 billion. And yet, this minnow could become the solution provider for the transportation sector's transition period—all the more so since its urgent financing needs have been met through a recently completed private placement of CAD 5 million in convertible bonds. This marks the beginning of a phase in which pilot projects and discussions will be converted into orders.

Cummins: The engine that refuses to go away

The question remains: How long will the transition period last? It is more likely that a semi-truck will pass through the eye of a needle than that diesel will disappear by mid-century. Since the exact timeframe depends primarily on political decisions and uncertain election outcomes, it is worth looking at the engine manufacturer Cummins. Its strategy, called "Destination Zero", is based on a technology-neutral modular approach: advanced diesel, electric, and hybrid powertrains, components, and, in the Accelera division, zero-emission technologies such as batteries. In short, the US company is betting on everything at once to be prepared for every conceivable outcome. The fuel cell alone turned out to be a USD 650 million bad bet; that business unit has since been sold. Otherwise, business is booming. Despite the fuel cell write-downs, the Columbus, Indiana-based company, founded in 1919, generated a profit of USD 2.8 billion on revenue of USD 33.7 billion last year.

Where the bulk of the profit comes from is the real punchline of the story. The results are driven by profitable growth in the Power Systems and Distribution divisions—fueled by rising demand for backup power for data centers worldwide. This segment is growing strongly thanks to the artificial intelligence boom. In the first quarter of 2026, revenue rose by 3% to USD 8.4 billion despite the sluggish truck segment, and the full-year outlook was raised. Instead of 3% to 8% revenue growth, the company now expects 8% to 11%. The engine that is actually supposed to disappear is footing the bill—whether in a semi-truck or in the machine room of a data center. This confirms dynaCERT's thesis: when the industry's best-capitalized, most technology-open player admits that the transition is proceeding more slowly and less cost-effectively than hoped, the "transition years" are, in reality, more like decades. And the thesis that "there is no need to switch just yet" receives its strongest evidence from the world's largest brand-independent manufacturer of diesel engines. Thus, the circle is complete.

Three Investments for the Long Goodbye

Traton is managing the long transition away from diesel; dynaCERT is profiting from its duration; and Cummins is hedging against every conceivable outcome to succeed, for the time being, precisely with the engine that is supposedly a model on its way out—and is being rewarded by the stock market with a steady upward trend. However, due to strong demand for backup power for data centers, Cummins is ambitiously valued. At the current price of USD 687, its market capitalization is USD 95 billion—well over double this year's expected revenue. At Traton, by contrast, the price-to-sales (P/S) ratio stands at 0.35, while at the crisis-ridden VW Group it is now close to 0.1. Cummins' P/E ratio of over 20 is also unusually high for the industry. By that measure, even newcomer dynaCERT is a bargain, even though the company is only just making the transition from developer to seller. Although analysts at GBC Research expect only a minuscule profit of CAD 0.01 per share this year, the P/E ratio remains a favourable 13 due to the low share price. Investors are therefore advised to adopt the Cummins strategy of taking a multi-pronged approach to be prepared for any scenario: Traton as a long-term value investment, Cummins as a bet on sustained high demand for the internal combustion engine, whether in trucks or data centers, and dynaCERT as a speculative spearhead for the portfolio. Traton's parent company, VW, on the other hand, is currently falling through the cracks despite its seemingly most attractive valuation. The news flow and chart pattern are simply too poor.