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Tesla’s market capitalization is close to $500 billion, after nearly 50% haircuts since it crossed $1 trillion in 2021. Monarch Tractor, which recently launched another major California-born electric vehicle – driver-optional tractor, All Electric – Valued by private market investors at $271 million.
But CEO Praveen Penmetsa says there are several reasons to believe it’s the next big thing in agricultural technology, and its home base is the perfect place for agriculture and technology to finally converge in a business model that solves some of farming’s biggest challenges.
“We’re turning Livermore into the center of agricultural technology around the world,” Penmetsa told CNBC correspondent Julia Burstyn of a local vineyard near her headquarters after being included in the 2023 CNBC Disruptor 50 list on Tuesday.
The startup recently signed a deal with Constellation Brandsmaking the wine giant the first company to put the MK-V tractors, which rolled off the production line in December, into the fields.
Farmers suffer from the rising labor costs and carbon footprint of diesel engines, while companies face new sustainability costs. These are the problems that Monarch Tractor can solve together.
“It’s more efficient in terms of work but reduces emissions and can power all the other equipment on the farm,” Penmetsa said.
When the company’s founders — including a former boss of factory giant Tesla — launched the company in 2018, the goal, Penmetsa said, was to build a tractor that every farmer in the world could eventually afford to use. Its Chief Agriculture Officer, Carlo Mondavi, is a fourth-generation member of the famous vineyard family.
The company and its tractors are not yet on the cost curve. EV tractors are still expensive — about $90,000 in the case of Monarch’s first line — but incentives in California and the cost of diesel have reduced the payback period for buyers to less than two years in the state, he said.
Penmetsa says it will also pay off for companies like Constellation Brands, which are facing increased requirements for reporting ESG targets and achieving cost savings from more efficient operations, while also winning over with consumers of the final product.
None of that would happen as easily if the company didn’t have roots in Silicon Valley. Cameras on the tractors and AI technology — with the help of an NVIDIA computing platform — can identify what’s happening on the tractor and in the surrounding area, Penmetsa said, and this allows Monarch to train the tractor “very quickly,” then move off to new farms and new crops.
“Farms and farmland are very close, but we are also very close to Silicon Valley, where AI technologies are being developed. Autonomy is developed here,” said Penmetsa, an autonomy and mobility engineer. “Electrical equipment and automobiles are developed here. This makes this a logical location for us to develop and deploy these technologies.”
Watch the full video above with CNBC’s Julia Boorstin to learn more about the emerging electric tractor industry opportunity.
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