Focus is on the Saleable and not the Possible
Driverless driving is here. Tesla claims its cars are fully self-driving at a safety level greater than with a human driver. Trucks with only a human monitor on board are already hauling refrigerators, along I-10 from Texas to California.
History shows that what happens in the automotive industry ultimately finds its way into farm equipment. Scott Shearer of Ohio State says, “If you can manage the liability of self-driving vehicles in downtown Los Angeles, we can probably learn to manage the liability in the middle of a cornfield in Nebraska.” Farmers’ razor-thin margins make an autonomous tractor a compelling proposition.
Kraig Schulz and Terry Anderson co-founded Autonomous Tractor Corp (ATC) in 2012, driven by the vision that one day the company will be the “Tesla for tractors.” Schulz spent more than 15 years consulting with bioscience companies on commercialization. Anderson has extensive automation experience, having founded seven successful technology companies, including Ancor Communications, which he sold to QLogic for $1.9 billion in 2000.
They actually built and demonstrated an autonomous tractor, but they found it to be nonviable as a business. A farmer’s routine has variations throughout the day, as well as seasonal challenges that require continuous tractor supervision. Besides, data from Iowa State University Extension shows that for row crops, labor only makes up 5 percent of the cost of farm production. Removing the farmer from disc-plowing the field wasn’t enough savings to justify the large capital expenditure. While possible it was not saleable.
But what they learned planted the seeds of success. The major takeaway was that for the work to be done during unpredictable, narrow windows of opportunity and seasonal pushes (when there’s a steep cost for labor) farmers need to be able to deploy specialized equipment as needed.
They also saw that electric power was set to replace diesel, which has been the mainstay on farms. Diesel engines continue to add weight, girth, complexity, and expense, as regulators mandate tighter exhaust rules. The trend, even among bus and truck builders, is for electricity to be used as a prime power source.
The team pivoted and recalibrated the scope of the company. They saw the need for self-propelled special-purpose implements that could control mounting costs, extend the life of farm machinery, improve performance, get better fuel economy, and reduce repair costs. “Autonomy is coming,” Schulz notes, “but at present the need is for semi-autonomous tools — smart enough to operate on their own — [to provide] a helping hand under the supervision of the farmer who is in the field anyway.”
Their first product was a boxy concept vehicle dubbed “Spirit” that could pull a 25-foot disc plow up and down a field without the aid of a driver, steering wheel, or cab. The concept earned the company second place and $30,000 in the MN Cup entrepreneurial competition.
But a new problem emerged. Farm equipment needs much more power and starting torque than an electric car. According to Schulz, for a 200 horsepower tractor to run 10 hours, it would require $350,000 worth of lithium batteries and weigh more than the tractor itself. And it would also need several recharges, with long dead times, to complete a job at an average farm.
Consequently, the company has adopted a diesel-electric drivetrain without batteries as the power source of choice. They developed an eDrive system that replaces a tractor’s differential and axles with four simple motors powered by a diesel-electric power plant that provides better fuel efficiency, simplified repair, and quieter operation. “The solution was a mix of electric and fossil fuel power that will prevail on the farm, for now,” Schulz says.
Consistent with their belief in electric autonomous equipment with precision capabilities for specific tasks, the company has retrofitted an electric crop sprayer that can apply fertilizer and other agents to crops. ATC also develops and markets aftermarket tractor parts such as generators, wheel motors, and electric drivetrain systems. These special-purpose tools reduce the complexity and large investment that would be needed for one multipurpose tractor. Its focus is on developing equipment that cuts the largest costs first. ATC has the potential to cut many costs by 50 percent for the farmer, it believes.
Contrary to its original aspiration, ATC does not sell a fully autonomous tractor and probably won’t for a long time. “Sometimes half is better than the whole,” Schulz says.
Given this refocus, a name like Semi-Autonomous Self-Propelled Implement Corp. might be appropriate. For now, the company is simply calling itself ATC.
A version of this article first appeared in Twin City Business Magazine April, 2019.
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Rajiv Tandon is executive director of the Institute for Innovators and Entrepreneurs and an advocate for the future of entrepreneurship in Minnesota. He facilitates peer groups of fast growth Minnesota CEOs. He can be reached at email@example.com.