Blockchain technology has seen an increasing trend in usage over the past two years. Several industries depend on the transparency and consolidation of blockchain to track their activities. One of those sectors that could have relied heavily on blockchain is electronic vehicles. However, a stagnation in the sector could also damage blockchain’s prospects.
The EV industry is facing saturation
In an interview with Yahoo Finance, CFRA VP Garrett Nelson said the EV market is currently extremely oversaturated. He added that the prospects for electronic vehicles in terms of production are brighter than reality. Nelson believes EV manufacturers may not see good profitability for another two to three years.
The comments come at a time when the EV industry is seeing a slowdown in upcoming profits. Industry giant BYD Electronics has forecast lower profits in 2023 than in 2022. Even Tesla had jumped on the same bandwagon saying that their short-term growth is currently unpredictable.
Blockchain is driving the EV industry to take a hit
As the EV industry approaches saturation, blockchain technology is one sector that could see the ripple effect. The use of this technology in EV cars was expected to be a major expansion. But as the EV hype wanes, so will the prospects for digital ledgers.
EV markets should be one of the biggest users of blockchain in the future. But as the segment faces uncertainties, blockchain expansion could result in the disappearance of one of its largest customer bases. Since its inception, digital ledger technology has always seen ways to grow beyond just the crypto space. The customer base and user base of the technology are just starting to peak. If the EV setback occurs in the future, it will likely result in a slow growth prospect for the blockchain industry.
The interdependence of blockchain and EV
There are currently several applications for blockchain in the EV automotive sector. According to Forbes, it is inevitable that most cars in the future will be electric. The use of blockchain technology for EV-related businesses will accelerate the growth of the EV sector. There are several reasons why owning an electric car can be difficult, but the two main ones are the scarcity of charging stations and the high initial cost of the vehicles. Blockchain technology offers a solution to these problems for EV operations. Applications built on blockchain technology have a track-and-trace function. This feature allows EV manufacturers to monitor materials as they are brought in for production.
According to research from McKinsey, digital ledger technology has the potential to provide the infrastructure for sophisticated networks that control distribution, trading, sales and payments. Blockchains and smart contracts can reduce costs and speed up transactions, which could help alleviate pain points and friction that exist along the entire energy value chain.
