This story appears in the August/September 2023 issue of Forbes Magazine. SubscribeOna sunny early summer afternoon at Wente Vineyards in Livermore, California, Monarch Tractor cofounder and CEO Praveen Penmetsa is deep into his robot-tractor spiel.He reels off the benefits of his $89,000 vehicle: It’s all-electric. It’s self-driving. It can mow. It can weed. Even though it costs about 80% more than a similar diesel-powered machine, it will ultimately save farmers money, increase their farms’ efficiency and make their operations less reliant on outside labor and fuel. “If there’s one thing that farmers like more than guns, it’s being self-sufficient,” he says with a laugh. “We need to change so that farmers don’t feel like there’s no future in farming.”The potential buyer, Bartley Walker of Pacific Ag Rentals, whose Salinas, California-based firm rents equipment to farmers, listens intently. He’s concerned about how farmers will be able to keep the Tractors charged in the fields but is impressed with the self-driving features. “We understand this is the future,” he says.On any given day, Penmetsa, 45, who spent nearly two decades working on electric and self-driving cars before pivoting to agriculture, is fighting to convince farmers, investors and lawmakers that making the switch to electric, self-driving tractors is both important and viable. Diesel tractors are a major source of pollution in agriculture, and farmers have long struggled to hire enough workers. Monarch’s machines promise to solve both problems.Launching an agricultural equipment company is tough. It is capital-intensive, and cash-strapped farmers tend to be a conservative lot resistant to change. But Livermore-based Monarch, which has raised $116 million in equity from investors and reached a valuation of $271 million at its most recent equity funding in November 2021, seems to have hit a tipping point. Last year, it booked $22 million in revenue, up from $5 million in 2021. This year Penmetsa expects revenue to increase three- to fivefold. That would bring it above $66 million, and possibly over $100 million, as the number of its tractors in the field goes from more than 100 to 1,000. As it expands, Penmetsa expects that more of its revenue will come from software subscriptions (up to $8,376 per tractor per year) that give farmers real-time alerts about sick plants and safety risks, plus gathering and crunching a ton of data to improve crop yields.Those numbers helped Monarch make the cut for this year’s Forbes Next Billion-Dollar Startups list, our annual showcase of the 25 companies we think are most likely to reach a $1 billion valuation. Penmetsa believes he can sell tens of thousands of tractors and reach revenue “in the hundreds of millions of dollars” within three years, enabling Monarch to go public then.To keep up with demand, last August Monarch inked a deal with Foxconn, the Taiwanese company famous for manufacturing most of the world’s iPhones, to make the SUV-sized beasts. It’s also licensing its tech, most notably to CNH Industrial, the London-based outfit behind the Case IH and New Holland brands, which is the second-largest tractor maker globally.Of course, Monarch, which was founded in 2018 by Penmetsa, Zachary Omohundro, Mark Schwager and Carlo Mondavi, isn’t alone in developing agricultural robots. John Deere, the agricultural equipment giant with $60 billion in revenue, announced last winter that it was working on an autonomous tractor geared toward large farms that require large machinery. Other startups are working on electric tractors (Solectrac) and autonomous electric tractors (Amos), as well as autonomous strawberry pickers (Agrobot) and collaborative robots that work side-by-side with human farmhands (Burro). But many of these efforts are at the early stages, and there is plenty of work to spread around.“Agriculture is the least automated of any major industrial market,” says Alastair Hayfield, a robotics researcher at Interact Analysis, a market intelligence firm based in the U.K. “This is a long transition.”Penmetsa’s tractors target vineyards and fruit-and-vegetable farms, which require smaller machines than the giant ones used by those who raise corn or soybeans. Its existing tractors are equivalent to a 40-horsepower machine, while the ones CNH will produce under license will be roughly equivalent to 75 horsepower.“Every meeting I have ends with ‘How are you going to take on John Deere?’ I see that as a testament to our success,” Penmetsa says. “They are asking us how we can take on Goliath. That is hugely empowering for us.”Penmetsa was born in Guntur, India, but grew up some 170 miles away in Hyderabad, a tech center with a population today of 11 million. He was a city kid, but his grandparents were the last in a long line of rice farmers. “We would go back every summer to my grandparents’ place,” he says. “One of the first times I held a steering wheel, it was a tractor steering wheel.”As a kid, he was fascinated by fast cars. (He still is. Many years back, he bought an old BMW clunker for $800 and fixed it up into a race car.) After earning a master’s in mechanical engineering at the University of Cincinnati in 2002, he got a job at MillenWorks, a Huntington Beach, California-based cutting-edge car company founded by legendary New Zealand race car driver Rod Millen. “I knew enough about business to know that race car companies are not solid endea­vors, so I wanted to find a company that was doing race cars and other things,” Penmetsa says.At MillenWorks, he helped develop an experimental robot for Darpa, the Defense Department’s research arm, and designed a battery pack for an early electric car that Mitsubishi debuted at the 2004 Detroit auto show. When Millen sold the company to Textron in 2010, Penmetsa decided to start his own firm, Motivo. Joining him there was a fellow MillenWorks alumnus, Omohundro, now 43, who holds a Ph.D. in robotics from Carnegie Mellon.At Motivo, they worked on electric vehicles, including demonstrating how a Toyota Prius could be repurposed into an emergency power generator. In 2012, Penmetsa went back to visit family in India and found himself frustrated by regular power outa­ges. “I was like, ‘I wish I had my Toyota Prius here so I could get my power back,’” he says. The idea, something of a joke at the time, got him thinking about how electricity could be brought to rural areas.When Omohundro came across a USAID grant to power agriculture in developing nations in 2013, he and Penmetsa took the challenge. At Motivo, they built their first electric tractor, a small, largely solar-powered machine called Harvest. They ultimately built three tractors, testing two of them in Penmetsa’s maternal grandparents’ village of Maharajpei.As they talked with farmers in India and then in the United States, they heard the same refrain: There’s no future in farming. “There’s a global shortage of labor in farming, they’re struggling with profit margins and there’s increasing pressure on them for sustainability,” Penmetsa says.Back in the U.S., they built experimental farm robots, including a potato transplanter and a lettuce weeder. But they were so expensive ($500,000-plus) that they could never be more than fancy demonstration projects. More commercially promising: tech for self-driving vehicles. While doing work for DriveAI (acquired by Apple in 2019) and Faraday Future, they began dreaming of an autonomous electric tractor at a price farmers could afford. “The cost offset for diesel fuel isn’t quite compelling enough, but if you have the diesel offset and the labor offset, that makes it compelling for the Farmer, and then you have a viable business,” says Omohundro, now Monarch’s chief technology officer.Soon, the duo teamed up with Schwager, 39, who previously led Tesla’s Gigafactory in Nevada and had experience scaling up large manufacturing projects. With Mondavi, 43—the grandson of Robert Mondavi, who now runs his own vineyards in California and Italy—as the fourth cofounder and chief farming officer, they formed Monarch in December 2018. They named it for the migratory monarch butterfly, threatened with extinction due to chemical use on farms.Leaning on Mondavi, they targeted vineyards, with their tight rows of vines, high labor costs and custo­mers willing to pay extra for a “green” product. Mondavi’s hope: By precision farming with Monarch’s robotractor, growers can use fewer chemicals without a decrease in yield or profitability. “We have changed the script that to do good by the planet costs more,” Mondavi says. “The economics piece is where we open the door.”Penmetsa believes he can sell tens of thousands of tractors and reach revenue “in the hundreds of millions of dollars” within three years.Building an autonomous electric tractor is difficult, and doing so at a price farmers can afford is even harder. In the early days, Monarch’s engineers pitched a tent at Wente’s vineyards to develop and test the machine. Monarch made only two, at a cost of a half-million dollars each. In 2021, it introduced a second version that cost $250,000 and began testing with vineyards and dairy farmers. To keep things simple, they focused first on automating one of the most basic farm tasks: mowing.Tom Chi, one of the founders of Google X and an early investor in Monarch through At One Ventures, recalls a launch event. “I was poking my head into conversations, and farmers were like, ‘Mowing is going to be a game-changer,’ ” he says. “My autonomy brain was like, ‘Mowing is so easy.’ I was so eager for the things to come that I was discounting mowing, and they were like, ‘We’ve only got so much farm labor, and when they’re out there mowing it’s a waste of money.’”Domenick Buck, director of support services at Coastal Vineyards, a vineyard management company, first saw the tractor during a demonstration in early 2021. “It actually worked; it drove,” he says with a laugh. As the price of diesel rose rapidly, and with California state subsidies for electric tractors offsetting as much as 75% of the cost, he signed on as an early customer. Today, the company operates 18 Monarch tractors for itself and its clients. “There are a lot of people who can’t afford to continue operating in California,” he says. “We’re looking for ways to stay ahead.”Those California incentives, for which Monarch lobbied, are a key to making the machine affordable. Penmetsa ultimately hopes to make a cheaper version that could sell for less than $15,000 in Asia and Africa. To do so, he’s setting up a partnership with a tractor manufacturer in India and is focused on renting versus purchasing. At the same time, the company’s licensing deal with CNH (which is also an investor in Monarch) will allow its technology to power somewhat larger utility tractors. Those should hit the fields late this year or early next.“Monarch is at the edge of product development,” says Michele Lombardi, CNH’s senior vice president of corporate development and venture capital. “I would expect that in ten to 15 years, you would find fruit pickers, harvesting equipment and tilling equipment running around autonomously.”One big problem: charging. Monarch’s machines need to run for many hours in fields far from any electrical outlets or even roads. One potential solution is solar charging, but for now most robots require access to a charging station that could cost thousands of dollars to install. Another potential roadblock: California regulations don’t yet allow tractors to be fully autonomous—they still require a human operator to tag along. Monarch has petitioned for full autonomy, and the state has agreed to reconsider after it collects more safety data.Longer-term, though, the rise of the robots is inevitable, given the industry’s persistent labor shortages. Back in the early days, Penmetsa recalls, investors called them masochists. “They have a lot of myths that really hurt us, like ‘farmers will not adopt technology,’” he says. “Farmers are very savvy, and they will adopt new technologies if there is an ROI for them.”