Blockchain helps China with green effort on cars

As automakers turn their attention to zero-emission vehicles, the application of futuristic technologies like blockchain is aiding efforts to cut costs amid fierce competition.

Global players such as Mercedes, BMW, and Toyota have outlined their approaches to adopting decentralized digital technology, and automakers in China are actively following suit.

Just before the Lunar New Year, China’s central government said it had selected 15 pilot zones and identified several areas for “innovative app” of blockchain technology. Shanghai, Beijing and Guangzhou were nominated for inclusion.

In total, 164 entities were chosen to participate, from banks and hospitals to energy utilities and local government departments. Only one automaker, SAIC-GM-Wuling, responsible for Hongguang’s best-selling electric vehicle, was chosen for trial.

Liuzhou-based SAIC-GM-Wuling is a company that sources more than 900 components daily from hundreds of suppliers in transactions running into the millions. It is a huge inventory management challenge and human error due to indistinguishable signatures on paper documents during part deliveries is possible.

To improve the efficiency of its supply chain, SAIC-GM-Wuling has started using a distributed ledger, a digital record of transactions and contracts that is kept decentrally in different locations. The company expects this system to reduce paper use by up to 10 million sheets a year and cut costs by about $2.5 million.

It may seem like a modest sum, but for a company like SAIC-GM-Wuling, which has produced a wildly popular electric vehicle for less than $5,000 while keeping an eagle eye on costs, it’s significant. In China’s competitive auto market, every penny matters.

This supply chain efficiency has never been more vital for automakers, particularly in the context of rising raw material costs and the need to invest heavily in the future of transportation, both in autonomous driving and in self-driving systems. smart vehicles.

Many people still find blockchain technology abstract and difficult to understand. Cryptocurrencies like bitcoin are the best-known example of how the technology is used, but decentralized digital ledgers have many applications for car companies and drivers.

BMW is using them to make life easier for consumers when shopping for second-hand cars by helping customers independently verify whether a vehicle has been involved in an accident or has had regular servicing.

In the coming decades, more automakers in China can be expected to follow SAIC-GM-Wuling’s example. Cost reduction is a major benefit, but conducting business in a more environmentally friendly way may turn out to be the bottom line.