Environmental, Social, and Corporate Governance (ESG) investing is an investing philosophy whose popularity has been growing in recent years. And investors interested in the trend may want to invest in Solectrac, a company that aims to change the future of the farming industry.
To go into a little more detail, ESG investing is all about making investing decisions based on social and environmental factors. That can mean things like looking for green companies, or those that don’t use abusive labor practices, to name just two examples.
ESG investing can offer a sustainable and competitive advantage with positive results in returns — and it can disrupt industries and markets. Read on to learn more about why it’s an ESG play and how you can invest in Solectrac stock via equity crowdfunding and private investing now.
What Is Solectrac and its Products
Solectrac, based in Northern California, designs and sells electric tractors that can replace the diesel vehicles that are widely used in the agriculture industry. This provides eco-friendly farming solutions. Compared to diesel tractors, the electric tractors have several advantage: they are cleaner, are quieter, are more efficient, are less expensive to use and provide their maximum torque and maximum power, regardless of the speed.
Running costs are expected to be lower for electric tractors, which have just a single moving part in the motor, whereas diesel tractors can have more than 300 of them. And having a quiet and more efficient tractor, especially when used for several hours per day, can be a great argument for modern farmers to make the transition.
But the “about” section of the company’s website makes perhaps the most compelling argument for switching to electric tractors: “Solectrac tractors provided an opportunity for farmers around the world to power their tractors by using the sun, wind, and other clean renewable sources of energy. Farmers are now independent of the pollution, infrastructure, and price volatility associated with fossil fuels.” The company is a certified B corporation, which means that it legally must weigh the social and environmental impact of its decisions.
The product line currently has two tractors: the 30-horsepower CET model with a base price of $25,800 and the 40-horsepower Utility model with a base price of $45,000. Two more models are under development. The company has a competitive advantage, already offering two fully electric tractors within the North American tractor market. According to Solectrac’s entry on StartEngine, “The market for agricultural tractors is $12 Billion in North America, with the largest share made up of tractors 40 HP-and-under.”
Reasons to Invest in Solectrac Stock
First, the North American tractor market is expected to grow significantly until 2023. A report on TechSci Research about the future of the North America tractor market states that:
“North America tractor market stood at over $ 12 billion in 2017 and is projected to surpass $ 20 billion by 2023, on the back of growing construction, infrastructure and mining sectors in North America. Moreover, rising wages of laborers are pushing farmers to purchase tractors to cut down this expense, which is further likely to push demand for tractors across North America. Additionally, growing competition in the North America tractor market is pushing OEMs to develop products with lower cost and higher efficiency. This factor along with rising penetration of autonomous tractors is anticipated to aid the growth of North America tractor market.”
The company has also been focused from the ground up on the electric tractor niche, and as part of that has patented and innovative solutions to supply the farming industry with clean electric tractors
Finally, a key supply chain partnership with a leading tractor manufacturer in India can offer economies of scale.
What Is The Business Model
Solectrac is focused on providing a solution to farmers, helping them reduce their operating costs and pollution by replacing diesel tractors with electric tractors. As of now, the company’s primary source of revenue is sales of its tractors. Additional revenue is based on sales of exchangeable battery packs and front loaders.
I particularly find it very attractive and supportive of the stock that it uses a reservation model. From each sale, they take a 50% deposit upon reservation, and the other 50% is collected upon delivery. This model may translate to strong operational cash flows.
Furthermore, the company may benefit from the global growth of the agricultural tractors market. According to Research and Markets, “The agricultural tractors market is forecasted to grow at a CAGR of 5.7% during 2019-2024.”
The Management Team is Highly Experienced
In any company, the board and the management team are very important for long-term success. Investors should like what they see here.
Stephen Heckeroth is the founder, CEO, and president. He has over 40 years of experience in the renewable energy industry, and first founded Solectrac in 1993 specifically to focus on electric tractors and other vehicles.
Heather Paulsen, who is the chief operating officer, not only has more than 15 years of experience helping organizations through big-growth periods, but she’s also “a leading B Corp Certification specialist with additional expertise in TRUE Zero Waste operations.”
And Joseph Nowicki, who is the executive sales director, was not only a leading salesperson with a top company, but also has direct agricultural experience.
How to Invest in Solectrac Stock
There is a minimum investment of $250, with a $1 price per share and a current $7.75 million valuation. There are bonus rewards for higher levels of investment which reinforce its green investment philosophy, such as trees planted according to the amount of money invested.
As always, do your homework about understanding the risks of equity crowdfunding and private investing before deciding to invest in climate-smart electric tractors, and maybe the future of tractors in the farming industry.
As of this writing, Stavros Georgiadis did not hold a position in any of the securities.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks