India’s biggest tractor exporter is betting big on electric tractors and quadricycles, aiming to transform agriculture and urban mobility. The company plans to target export markets initially, with launches expected within two years.
24 Sep 2024 | 11504 Views | By Kiran Murali & Ketan Thakkar
In the race towards electrification, one might expect the spotlight to fall on sleek passenger cars or nimble two-wheelers. Yet, quietly rumbling in the background, a revolution is brewing in an unexpected sector: tractors. Sonalika Group, India's leading tractor manufacturer, is not just joining this green wave—it wants to lead ...
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In the race towards electrification, one might expect the spotlight to fall on sleek passenger cars or nimble two-wheelers. Yet, quietly rumbling in the background, a revolution is brewing in an unexpected sector: tractors. Sonalika Group, India's leading tractor manufacturer, is not just joining this green wave—it wants to lead it.
With a Rs 1,000 crore investment plan, Sonalika is set to transform the traditionally diesel-dependent world of agricultural machinery. But the company's ambitions don't stop at the farm gate: Sonalika is also venturing into the production of electric quadricycles.
For the company, this dual-pronged approach isn't just about keeping pace with global trends. It is about reimagining the future of farming and transportation, promising benefits that range from reduced carbon emissions to improved efficiency and cost savings for farmers.
Sonalika has a market share of around 13.5% in the domestic tractor market and is among the top tractor exporters from India with a share of 34.3%, exporting to all major global markets. It currently has one manufacturing facility in Hoshiarpur, Punjab, which can produce 3 lakh tractors per annum. Globally, Sonalika has six facilities, which include CKD facilities, and spare parts and fulfillment centers.
New Green Revolution
Migration of tractors from diesel to electric is not just about eliminating tailpipe emissions. Electric tractors can provide economic benefits, which would be welcomed with open arms by cost-sensitive Indian farmers, and better productivity. In addition, they come with an advantage their diesel cousins can’t offer – instant torque.
“As a solution, an electric vehicle is perfectly meant for tractors," says Sonalika Group Joint Managing Director Raman Mittal. "Off-highway vehicles need torque from the get-go. Electric vehicles as a technology satisfy the primary need of the product category.”
He said that the group is in the “advanced stages” of developing electric tractor models and is currently working on improving the cell packaging. Unlike other vehicles, Mittal noted that cell packaging is not easy for tractors, primarily because tractors do not have a big underbody to package the cells there.
As for the roadmap, compact tractors up to 35 horsepower are likely to be electrified initially. These are designed for relatively small farms, for hobby farmers with small acreage, mainly in Western markets. Various implements, like front-end loaders or small backhoes, can be attached to these tractors for multiple applications.
The primary barrier to the widespread adoption of electric vehicles across all segments is the higher upfront acquisition cost, followed by charging infrastructure and range anxiety. While the latter two factors may not be a big hurdle in the tractor segment, the higher initial cost of electric tractors is going to be a significant challenge.
Market Strategy
Given the price sensitivity of Indian farmers, overcoming the cost barrier will be crucial for the success of electric tractors in the domestic market. With its electric vehicle portfolio, Sonalika Group will target export markets initially. It will also be considered for the Indian market, depending on market readiness.
Mittal believes almost half of its tractor exports have the potential to get electrified in the early stage. "That is what we firmly believe – tractors of up to 30-35 HP, especially for hobby farming in the US because they are more attuned to it. Let us say, we do 35,000 tractor exports, of which 50% are compact tractors. So, we know that 15,000 definitely will evolve into electric," Mittal said.
The company seems to be trying to replicate the global success of its Yanmar and Solis brands in the electric category. The company declined to provide a specific launch date for its electric tractor, but it is anticipated to hit the market within the next one to two years.
"We would be ending up investing close to Rs 50 crore till next year just on the research part of it, which is getting out the prototypes or the first working electric tractor. Then the real plan is to set up a facility for those," Mittal added.
Interestingly, the group has already introduced its first electric tractor – Sonalika Tiger Electric - in the market in 2022. The model, with an 11kW motor, was launched as a pilot to gauge market preparedness and did not generate much volume for the company.
Expansion Plans
The company has already started planning for manufacturing. Recently, the company unveiled plans for its second tractor plant near its primary facility in Punjab. It plans to invest Rs 1,000 crore to scale up exports to 1 lakh.
"We are now considering a third plant, which will purely be for electric vehicles," Mittal said.
The third plant for electric vehicle manufacturing could be outside Punjab as the company officials are scouting for land in adjoining states such as Delhi NCR, Uttar Pradesh and Haryana. To ensure reduced cost, better efficiency, and competitive advantage, the company has plans to vertically integrate the proposed dedicated electric vehicle plant, which will have its own battery facility.
Microcars
Meanwhile, Sonalika Group believes electric quadricycles, or microcars, are gaining popularity in Europe. Their size is significantly smaller and lighter than traditional cars, and they are easy to park and navigate on busy streets.
"We have noticed that microcars are something that every European country would need, considering their smaller size which makes it easy to space and navigate through. And unlike India, the pricing of entry-level/small cars is not a challenge in Western countries," Mittal said.
The company has already designed an electric quadricycle at its facility in Hoshiarpur in partnership with some global players for the western market.
"The prototype is ready. Now we are just going through the feedback phase," Mittal said.
When asked about the timeline for the launch of quadricycles, Mittal said: "We are in no hurry. We are very close to the end game, getting over there." The company, however, has no plans to get into traditional cars.
By bundling tractors and quadricycles in the electrification project, Sonalika could be looking to make its electrification drive more profitable by spreading costs and leveraging economies of scale.
Besides tractors and quadricycles, the company is also looking at electric lawn mowers.
"Within farm equipment, we want to move towards electrification and keep building on it. It does not matter if it is a five-year story or ten-year story. We are committed to it," Mittal added.
This feature was first published in Autocar Professional's September 1, 2024 issue.