Monarch Raises $61 Million for Its Fleet of Electric Tractors

(Bloomberg) -- Monarch Tractor has raised another $61 million in capital, in its ongoing efforts to electrify farm equipment and disrupt the world’s largest and dirtiest diesel engines.

The latest fundraising round, announced by Monarch this morning, includes an undisclosed investments from CNH Industrial, an Italian-American manufacturer second only to Deere & Co. in the market for agricultural equipment, and the venture arm of Trimble Inc., a California-based technology giant specializing in GPS and location-based software.

“It (adds) huge credibility in terms of what we’re doing … and where the market is going,” Chief Executive Officer Praveen Penmetsa said. “It definitely positions us as a leader for electrification in the farm space.”

The investment will help Monarch to accelerate production and expand distribution to Asia, Europe and South America, Penmetsa said. Today, the company can build about two of its $58,000 electric tractors a day in its Silicon Valley nerve center, which serves as a factory, research and development lab and headquarters. Penmetsa plans to make up to 6,000 tractors a year by the fall of 2023. 

CNH also bought into Monarch as part of a $20 million first investment round that closed in March. Earlier this month it signed a licensing deal that will allow CNH to bolt Monarch’s electric drivetrains and autonomous driving technology onto its own machines. Monarch has not yet disclosed its valuation, but Penmetsa said it has tripled since it raised money in the spring. 

Mike Wiles, a YouTube reviewer of farm machinery, is convinced the e-tractor will build momentum, particularly if battery prices continue to improve. Though, Wiles, who goes by “Tractor Mike,” has fielded sharp criticism for videos on the Monarch machine, typically from older, conservative farmers. “The ag world is going to do it the way they’ve always done it,” Wiles explained. “But if and when an electric tractor has the potential to save a farmer money, they’ll figure it out.”

Tractors, in many ways, are an ideal use case for electric technology. The weight of the ponderous battery that goes into Monarch’s machine isn’t much of a liability in the field and electric motors can be controlled much more precisely than a diesel engine. What’s more, Monarch has engineered its rig to easily swap batteries, letting farmers run it almost 24/7 on long harvest days. 

Battery technology and electric motors still aren’t a good fit for farming at its largest scale, namely the giant combine harvesters that swallow acres of corn, wheat and soybeans every year. But Monarch is making inroads with so-called specialty farms that use smaller machines, including orchards, vineyards and those growing other fruit and vegetable operations. These operations happen to be the ripest part of the auto machinery market at the moment. Of the 305,000 tractors bought in North America last year, some 68% were models with less than 40 horsepower, a slice of the sector that has grown by almost two-thirds in the past five years, according to Deere. 

Lately, Monarch has heard been fielding inquiries from farmers in Peru — they grow much of the world’s organic avocados and asparagus — and dairy farmers in the Midwest who are keen to let the dusty robot push out feed and track down cows that wander off. In the four years since he cofounded Monarch, Penmetsa has developed an all-purpose sales pitch: “It’s truly a Swiss Army knife for farmers.”

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