Navistar abandoned its own emissions technology and switched to a rival's

Navistar had bet its truck engine business on a proprietary exhaust-gas-recirculation-only approach to meeting 2010 EPA diesel emissions standards, rejecting the selective-catalytic-reduction technology every major competitor adopted. The strategy collapsed in 2012: Navistar's own SEC filing discloses $34 million in charges for non-compliant engines, and a June 2012 court ruling vacated the EPA rule letting Navistar keep selling engines under a conditional certification. Navistar posted a net loss of $3,010 million for fiscal 2012, reversing $1,723 million in net income the year before.

Navistar abandoned its own technology rather than keep defending it. In October 2012 it signed an agreement with Cummins to supply SCR after-treatment systems, phasing in Cummins-equipped engines that December. CEO Daniel Ustian resigned that August, and Navistar settled with activists Carl Icahn and Mark Rachesky, each holding roughly 15% stakes, seating board designees in place of incumbent directors.

The technology switch and board changes led to a slow, multi-year climb back to profitability rather than an immediate turnaround. Navistar's own 10-K shows net losses narrowing every year from $898 million in fiscal 2013 to $184 million in 2015 and $97 million in 2016, before the company posted its first full-year profit since 2011, $30 million, in fiscal 2017.

Scrapped its own technology and licensed Cummins' SCR system, fielding compliant engines quickly and returning to a $30m profit by FY2017.

Abandoning the proprietary engine technology rather than continuing to defend it stopped Navistar from compounding the compliance failure with more non-conforming engines while a fix was developed.

Licensing SCR from Cummins, a competitor, let Navistar field a compliant engine on a workable timeline instead of developing its own SCR system from scratch under regulatory pressure.

Letting activists reshape the board gave Navistar oversight independent of the leadership that had committed it to the failed technology bet in the first place.

When a proprietary technology bet fails a hard standard competitors already meet, licensing a rival's working solution rather than defending your own can be the faster path back to a sellable product.

Navistar posted net income of $30 million in fiscal 2017, its first full-year profit since 2011, after net losses exceeding $3 billion in fiscal 2012 and hundreds of millions in the years following, according to its own SEC filings. Navistar continued operating under its post-2012 board and technology strategy until being acquired by Traton, Volkswagen's truck and bus subsidiary, in 2021, and its abandoned EGR-only emissions strategy remained a widely cited case of a proprietary technology bet failing against an industry-standard alternative.