Monarch Tractor may lay off 100 employees or shut down as it struggles to pivot away from manufacturing toward pure software model

Monarch Tractor has warned employees it may cut more than 100 jobs and could face a complete shutdown, according to an internal memo cited by former staff. The California-based autonomous electric tractor startup has already reduced headcount in recent weeks across its U.S. operations and remote teams in India and Singapore.

Founded in 2018 by former Tesla executive Mark Schwager and vintner Carlo Mondavi, Monarch Tractor has raised at least $220 million to develop “driver-optional” electric tractors for vineyards and fruit farms. The company reports that it has delivered approximately 500 units to date. A restructuring announced in late 2024 aimed to broaden applications to dairy operations and golf course maintenance, while shifting focus toward software services and licensing of its autonomous technology.

The company’s transition has been complicated by operational setbacks. Monarch lost its contract manufacturer, Foxconn, earlier this year and is fighting a lawsuit from Idaho dealership Burks Tractor, which alleges the vehicles delivered in 2024 were defective and unable to operate autonomously. Monarch has denied the claims in court filings.

In Thursday’s memo, the human resources department stated that the company is accelerating its move away from manufacturing and toward commercializing autonomous software as a service. It warned that the timing of the shift “puts Monarch at risk of shutdown” and said up to 102 positions could be permanently eliminated.

Chief Executive Praveen Penmetsa told TechCrunch that licensing accounted for more than 70% of revenue in 2025 and is expected to continue growing next year. He said investor interest is focused on Monarch’s software and autonomy systems for off-highway equipment, and that the layoff notice reflects a reallocation of resources toward those areas. The company did not disclose current revenue or workforce size. Monarch employed roughly 300 people before a round of layoffs in late 2024.

The startup has also seen senior departures. Schwager, who helped launch Tesla’s first gigafactory before co-founding Monarch, stepped down from executive duties this year while remaining on the board.

The memo highlights the financial pressure facing autonomous machinery startups as they strive to scale hardware-intensive businesses and transition toward recurring software revenue. Monarch said the transition is intended to create new revenue streams for equipment makers, but acknowledged it may not be completed in time to stabilize operations.