Caterpillar Inc (NYSE:CAT) is no stranger to investing in electric vehicles or new technologies in recent years. The company could be making its biggest bet in some time in the EV field with the reported acquisition of self-driving tractor startup Monarch.

Caterpillar Acquires Monarch

After turning in a strong 2025 in which Caterpillar was the top-performing member of the Dow Jones Industrial Average, the industrial equipment giant could have its eyes on its next phase of growth.

The company is acquiring self-driving electric tractor company Monarch Tractor, according to Bloomberg.

The deal comes after Monarch has recently announced staff layoffs and has struggled to grow on its own. The startup raised over $250 million in investments as a private company.

Sometimes called the Tesla of agriculture, Monarch was once one of the key players in the electric tractor sector before running into problems. The company was founded by a team that includes former Tesla employee Mark Schwager.

While Caterpillar and Monarch have not confirmed the acquisition, Monarch announced on LinkedIn that it had sold to a "large global equipment manufacturer.”

Monarch also highlighted its recent pivot to a licensing model, away from manufacturing, in recent months.

"We had to make difficult decisions, including a shift away from manufacturing to a technology licensing model which validated that the core EV & AV technology could operate across tractors, augers, utility vehicles, and construction equipment," Monarch said.

Caterpillar Bets on Technology

The reported acquisition of Monarch and its self-driving technology comes as Caterpillar could be growing its focus on technology and add-ons for equipment.

The company expanded its partnership with NVIDIA Corporation (NASDAQ:NVDA) earlier this year and highlighted AI-powered solutions for machines, job sites, factories, and supply chains at CES 2026.

“As AI moves beyond data to reshape the physical world, it is unlocking new opportunities for innovation – from job sites and factory floors to offices,” Caterpillar CEO Joe Creed said previously.

Creed said the company is focused on deploying advanced technology across all aspects of the business and all its machines.

“Our collaboration with NVIDIA is accelerating that progress like never before.”

Caterpillar will use the Nvidia Jetson Thor platform, which allows for real-time AI inference on construction, mining and power equipment.

The company said the collaboration will allow Caterpillar to be ready for AI-assisted and autonomous operations. Caterpillar said the new features include personalized insights for customers, real-time coaching, AI-driven recommendations, computer vision and a “digital nervous system for customers’ jobsites.”

The acquisition of Monarch could enable Caterpillar to add self-driving technology and features to equipment it manufactures or offers as an add-on package, with the potential for a subscription service similar to Tesla's FSD.

Equipment manufacturer rival Deere & Co (NYSE:DE) has been working on new AI products and also has self-driving tractors and equipment available to customers.

The acquisition could be both about growing existing products and also about taking on a key competitor to not be left behind in the shift to AI-powered equipment and self-driving technology in the agricultural sector.

Caterpillar Stock Price Action

With the deal not officially announced, investors may be showing they don't love the initial reports. Caterpillar shares are down 2.4% to $775.62 on Wednesday versus a 52-week trading range of $282.46 to $798.54. Caterpillar stock is up 30% year-to-date in 2026 and up over 160% in the last 52 weeks.

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