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Tesla’s market cap is roughly $500 billion, and that’s after a roughly 50% haircut since it topped $1 trillion in 2021. Monarch Tractor, which recently debuted another key electric vehicle born in the state of California — a driver-optional, all-electric tractor — valued by investors in the private market at $271 million.
But its CEO Praveen Penmetsa says there are several reasons to believe it’s the next big thing in agtech, and its home base is the perfect place for agriculture and tech to finally come together in a business model that solves some of farming’s biggest challenges.
“We are turning Livermore into the center of agtech for the world over,” Penmetsa told CNBC’s Julia Boorstin from a local vineyard near its headquarters after it was named to the 2023 CNBC Disruptor 50 list on Tuesday, ranking No. 49.
The startup recently signed a deal with Constellation Brands, making the liquor giant the first company to put its MK-V tractors, which rolled off the production line in December, out in the fields.
Farmers are struggling with high labor costs and their diesel engine carbon footprint, while corporations are facing new sustainability costs. These are problems that Monarch Tractor can solve in combination.
“It’s more efficient on the labor side but decreases the emissions and can power all the other equipment on the farm,” Penmetsa said.
When the company’s co-founders — including a former Tesla gigafactory chief — launched the company in 2018, the goal, Penmetsa said, was to build a tractor every farmer in world can eventually afford to use. Its chief farming officer, Carlo Mondavi, is a fourth generation member of the famous vineyard family.
The company and its tractors are not there yet on the cost curve. EV tractors remain expensive — around $90,000 in the case of Monarch’s first line — but incentives in California and the cost of diesel have brought the payback period for buyers down to as little as two years in the state, he said.
Penmetsa says it will also pay off for companies like Constellation Brands, which face mounting requirements to report on ESG goals and generate cost savings from more efficient operations, while also winning with consumers of the end product.
None of that would be happening as easily if the company didn’t have Silicon Valley roots. The cameras on the tractors and AI technology — aided by an NVIDIA computing platform — can identify what is happening on the tractor and out into the surrounding acreage, and that allows Monarch to train the tractor “very quickly,” Penmetsa said, and then go out to new farms and new crops.
“Farms and farmland are close by, but we are also very close to Silicon Valley, where AI technologies are developed. Autonomy was developed here,” said Penmetsa, who is an autonomy and mobility engineer. “Electric equipment and cars were developed here. So that makes this the logical location for us to develop these technologies and deploy them.”
Watch the full video above with CNBC’s Julia Boorstin to learn more about the nascent EV tractor industry opportunity.
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