Blockchain technology has seen an upward trend in usage in the past two years. Various industries depend upon the transparency and consolidation of blockchain to keep track of their business. One such industry that could have heavily backed upon blockchain is electronic vehicles, however, a stagnation in the industry could also hurt blockchain’s prospects.
EV industry to face saturation
In an interview with Yahoo Finance, CFRA VP Garrett Nelson said that the EV market is extremely oversaturated right now. He added that the outlook for electronic vehicles in terms of production has been rosier than reality. Nelson believes that EV makers will possibly see good profitability only after 2-3 years from now.
The remarks come at a time when the EV industry is seeing a slowdown in upcoming profits. The industry behemoth BYD Electronics has predicted a slower 2023 profit as compared to 2022. Even Tesla had jumped on the same bandwagon to say their short-term growth is currently dicey.
Blockchain spur to take a hit with EV industry
As the EV industry approaches its saturation, a sector that could see its ripple effect is blockchain technology. The use of this technology in EV cars was expected to be a great expansion. However as the EV hype dies down, so will the outlook for digital ledgers.
EV markets are supposed to be one of the biggest users of blockchain in the future. But as the segment faces uncertainties, the blockchain expansion could see one of its biggest customer bases disappear. 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 have just started reaching highs. If the EV setback does take place in the future, it will likely result in a slow growth prospect for the blockchain industry.
The blockchain and EV interdependence
There are currently several applications for blockchain in the EV car sector. According to Forbes, it is inevitable that most automobiles in the future will be electric. Utilizing blockchain technology for EV-related businesses will accelerate the growth of the EV sector. There are several reasons why owning an EV 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 issues for EV operations. Applications built on blockchain technology have a track-and-trace function. EV manufacturers can monitor the materials as they are brought in for production because of this feature.
According to McKinsey research, digital ledger technology has the potential to offer the infrastructure for advanced networks that control distribution, trade, sales, and payments. Blockchains and smart contracts can reduce costs and speed transactions, which could assist in alleviating pain points and friction that exist along the entire power value chain.