How the Electric Car Industry can Reduce Costs with Blockchain


The U.S. electric vehicle (EV) industry has seen big developments in recent years, especially with the introduction of several new models. But despite this, EV adoption is still low, with sales just representing around 2 percent of all vehicle sales in North America.

It is important to note, however, that recent threats by the Trump administration to cut subsidies for electric cars could greatly hurt EV adoption across the U.S. Cost is often a major concern for the electric car industry – partly because battery technology used for electric cars is expensive along with the cost of rolling out charging infrastructure. But with the implementation of blockchain technology, electric car makers could see a significant decline in production costs.

Blockchain— a distributed and continually reconciled ledger technology managed by a peer-to-peer network— holds the potential to reduce costs, improve operational processes, and help automakers boost their competitive edge. In the past few years, automakers have been testing blockchain technology to find new ways to create value to consumers by adding innovative car features.

Cost reduction through efficient tracking of parts

If Congressional Republicans decide to cut EV subsidies, the total cost of ownership of electric cars will increase by at least $2,500 and up to $7,500 per car. Manufacturers, on the other hand, face the risks of having the federal tax credit phased out once they hit 200,000 total electric cars sold.  Consumer subsidies such as tax credit allow manufacturers to cut prices on EVs in order to encourage consumer adoption.

Despite this uncertain future, car manufacturers have the opportunity to minimize the impact of tax credit loss by leveraging blockchain technology to reduce production costs, boost profits, and sustain growing consumer demand. For example, a blockchain-based system for tracking vehicle parts could be used to instantly capture and store data about the history of vehicle parts  so that all participants can check the origin of a given part and whether or not it is authentic. Such a system can provide a better view of supply chain activities, helping manufacturers to minimize costs on their end by eliminating counterfeits and fraud. This could also translate into more cost-effective product recalls and better licensing of intellectual property. The implementation of blockchain technology will ensure a transparent and efficient supply chain.

Blockchain to help increase consumer trust

While federal subsidies have helped to boost consumer demand for plug-in electric vehicles, the absence of these incentives will not stop EVs from going mainstream. And even California, which constitutes half the U.S. EV market, will continue to drive EV growth across the country. The business case is so compelling that even China, the leading contributor of greenhouse gases in the world, is planning to overhaul fuel-powered vehicles and make them fully electric by 2021.

Meanwhile, Ford and GM are leading the way with the promise to offer 34 fully electric models by 2023.  This means that the EV selection surge will lead to increased competition as companies seek to differentiate their vehicles in ways that appeal most to consumers.

Blockchain offers a fully transparent mechanism where all participants are using the same ledger to track all the steps of the production process and are accountable for the quality of the data being entered ensuring operational transparency regarding how the vehicle was manufactured. For instance, an immutable record of the condition of the car battery is crucial in estimating the current health of the battery, which then becomes the basis of contract between the battery supplier and the EV manufacturer. This helps to improve trust among automakers and their suppliers and partners but also with consumers — this is essential for companies that want remain competitive in this burgeoning market.


By enabling cost reduction, bringing innovative vehicle features, and allowing manufacturers to produce cars more efficiently, blockchain can certainly play a huge part in driving EV adoption.  The automotive industry has begun to take note of this disruptive technology and it won’t be long before we see a new era of blockchain for electric vehicles.

Ray Battrick is a certified blockchain expert and FinTech copywriter who is devoted to working for you to build blockchain-based applications for your business. Ray is also a FinTech copywriter who is skilled at creating persuasive content for a wide range of products, including financial technology, business blockchain, investing and more. As an avid blockchain enthusiast, Ray enjoys writing about business blockchain, ICOs and cryptocurrency investment.

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