How China’s Car Makers Are Using Blockchain to Cut Costs

China’s auto industry is following the lead of global car brands like BMW, Mercedez Benz, and Toyota and using blockchain technology for data recording and to reduce production costs.

According to Automotive News, some major global car brands have started adopting decentralized ledger technology to slash costs by improving the supply chain.

It added that the central government in Beijing had identified 15 pilot areas and named a few areas for the “innovative application” of blockchain technology even before the start of the Lunar New Year.

Among the areas included in the pilot zones are Shanghai, Beijing, and Guangzhou. In addition, a total of 164 entities, from banks, hospitals, power utilities, and local government departments, were selected to join the project’s initial study. 

Chinese carmaker SAIC-GM-Wuling, responsible for the top-selling Hongguang Mini EV, was included in the trial run.

The Liuzhou-based manufacturer buys more than 900 components needed to build cars from hundreds of suppliers. The transactions run to millions of dollars making stock management of the inventory a significant challenge.

The process also exposes the company to potential human errors, from indistinguishable signatures to paperwork going missing during parts handovers.

Adopting blockchain tech will lead to greater efficiency and lower CO₂

SAIC-GM-Wuling expects blockchain, or the decentralized distributed ledger technology, will improve the efficiency of their supply chain, enhance transaction records and reduce the dependence on paper. The manufacturer spends up to $2.5m annually on nearly 10 million sheets of paper.

In late January this year, Mercedes-Benz announced it would leverage blockchain technology to track and monitor carbon dioxide emissions, including secondary material with the complex supply chain of the mineral cobalt used to manufacture batteries.

The luxury automobile brand wants to encourage transparency on CO₂ emissions along the cobalt supply chain.

In 2018, BMW launched a program to prove the batteries it uses for its electric cars contain only clean cobalt utilizing blockchain technology.

And China-owned Volvo has used blockchain technology to prove materials used in its manufacturing are ethically sourced.

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