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Electric farm tractors are tractors that use an electric motor to obtain drive as opposed to the conventional internal combustion engine. Electric farm tractors use a series of batteries to generate power and have fewer mechanical parts. Rise in awareness about clean and sustainable farming is boosting the growth of the electric farm tractor market. Majority of farms globally are subsistence farms and are owned by small farmers; the small farmers are adopting small electric farm tractors for low power demand applications. Furthermore, the trend of consolidation of small farms and their acquisition by commercial farm owners is boosting the need for tractors and is further expected to boost the sale of electric farm tractors. The electric motors have double the torque and as a result are capable of pulling heavier loads. The 60-HP tractor can conduct the work of the 120 Hp diesel tractor. Moreover, the added advantage of low-emission and low maintenance charges of electric farm tractors as opposed to conventional tractors is a major advantage of the electric farm tractor market.
COVID-19 Impact analysis
The vendors in electric farm tractors across the globe is being affected severely due to the restrictions on producers as well as the declared lockdowns which in turn is affecting the electric farm tractors manufacturers worldwide. The segment has seen a sharp decline in the electric farm tractor business and the most affected business could be the dealership network due to the disturbance of the supply chain. For instance, Mahindra and Mahindra, one of the leading tractor manufacturing company announced an estimated loss of 30,000 tractors sales from April to June 2020 as a result of lockdown and other restrictions. This figure came up to 253k units being sold by December 2020 owing to the increasing demand of food production and impacting agriculture directly. Electric farm tractors market is an evolving industry, which has been currently hampered due to the unavailability of workforce owing to the spread of the coronavirus which in turn have disrupted the production and installation of electric farm tractor across the affected countries. Disruption owing to the covid-19 outbreak is observed in the electric farm tractors market which in turn has caused an uncertainty towards the demand and supply network for the electric tractors manufacturers.
Top Impacting Factors
The electric farm tractor trends are as follows:
Rise in Government initiatives
Globally government of various countries have further promoted the adoption of electric farm tractor and other agricultural machineries. This has resulted in a change from the traditional agriculture practice to a more modernized process. Although India has a lower level of mechanization compared with other developing countries such as China and Brazil, India is definitely in the growth stage. For instance, to rise the green mechanization level, the Indian government is encouraging electric powered farm tractors, by providing subsidies on agricultural electric tractor, which is expected to strengthen the electric tractors market. The government's goal is to promote the growth of the agricultural sector through its Rashtriya Krishi Vikasa Yojana (RKVY). The Scheme is being implemented throughout India with 100 percent central assistance for increasing the level of electric farm mechanization in India’s agriculture sector. Similarly, the Canadian government has implemented the “Canadian Agricultural Loans Act” (CALA) program that provides farmers with a loan up to USD 500 thousand for purchasing land or tractor. Thus, the government initiative is expected to drive the growth of the electric farm tractor market.
Implementation of stringent emission norms
Increase in carbon footprint has enforced governments across the globe to implement stringent emission norms, thereby creating a negative impact on the growth of ICE-based agricultural tractor. In the European Union (EU), CO2 emission targets in 2018 were set at 175g/km. According to the new regulation standards (Regulation (EU) No 2019/631), the average CO2 emission target were 147 grams of CO2 per kilometer. The new regulations focused on reducing average CO2 emission by 31% by 2030 as compared to 2021. The commission imposed an excess emission premium on the manufacturer of $112.15 for each g/km that is exceeded for all registered vehicle if the manufacturer exceeds specific emissions target. Moreover, stringent CO2 emission regulations impacted the manufacturing expenditure. Hence, such limitations affected the growth of the ICE based farm tractor, and thus directly driving the market for electric farm tractor.
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Questions answered in the electric farm tractor research report:
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