As automakers shift their focus to zero-emission vehicles, Blockchain technology is used to assist in cost-cutting efforts in the face of fierce competition. China’s automakers are using blockchain technology to improve their green credentials. Mercedes-Benz, BMW, and Toyota have all stated their intentions to implement decentralized digital ledger technology, and Chinese automakers are eager to follow suit.

China’s central government announced just before the Lunar New Year that it had chosen 15 pilot zones and highlighted numerous areas for blockchain technology’s “innovative deployment.” One hundred sixty-four institutions representing banks, hospitals, power utilities, and local government departments were chosen to participate, with Shanghai, Beijing, and Guangzhou receiving the most nominations. Only one automaker was selected for the trial: 

SAIC-GM-Wuling, which produces China’s best-selling Hongguang Mini EV. Liuzhou-based SAIC-GM-Wuling is a corporation that buys over 900 components each day from hundreds of suppliers in multimillion-dollar transactions. It’s a big stock-management challenge because indistinguishable signatures on paper-based documents can lead to human error during part handovers. SAIC-GM-Wuling has begun to employ a distributed ledger to increase the efficiency of its supply chain. The distributed ledger is a digital data of transactions and contracts maintained decentralized across several locations. This method is expected to save the corporation up to $2.5 million per year by reducing paper usage by 10 million sheets per year. That may appear to be a small number, but it’s significant for a business like SAIC-GM-Wuling, which has built a tremendously popular EV for under $5,000 by keeping a close check on prices. Every penny counts in China’s price-competitive car market.

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This boost in supply-chain efficiency is more important than ever for automakers, especially in light of rising raw material costs and the need to spend extensively in the future of transportation, including autonomous driving and sophisticated vehicle systems. Other domestic automakers are beginning to go above and beyond. In November, Great Wall Motor, the country’s most considerable SUV manufacturer, stated that it would adopt blockchain technology to reduce labor costs by outsourcing activities. Many individuals still perceive blockchain technology to be enigmatic and difficult to comprehend.

Cryptocurrencies like Bitcoin are the most well-known blockchain technology, but decentralized digital ledgers have several possibilities for automobile manufacturers and drivers. BMW utilizes them to make it easier for buyers to acquire used cars by allowing them to independently check if a vehicle has been in an accident or has been maintained regularly. One significant benefit is cost reduction, but the ultimate payoff may be conducting business more environmentally friendly. More Chinese automakers are likely to follow SAIC-GM-led Wuling’s in the following decades.