Tokenization is the key to reforming the EV industry[Opinion]| coindesk JAPAN | Coindesk Japan

Electric vehicles (EVs) are one of the hottest technologies right now. Last month, the Biden administration announced a historic policy to promote the spread of EVs. Under new regulations from the Environmental Protection Agency (EPA), by 2030, at least 50% of all new cars built in the US must be electric. In effect, it mandates the construction of new supply chains, assembly lines and manufacturing facilities in North America.

The Only Way to Bring Transparency

Blockchain is not only necessary to enable this supply chain. It’s the only way to ensure transparency and human rights as America decarbonises.

As of now, there are few reliable ways to ascertain whether automakers and battery makers are taking the right steps in sourcing raw materials. Batteries and auto parts are often sourced and assembled across multiple continents, from coal mines in Africa to factories in Asia to car assembly lines in Europe, before reaching their final destination.

As cars make their way to the roads of America, even federally favored manufacturers can hide the origin of raw materials and use unclean energy in many aspects of the manufacturing process. end up

Complex, non-transparent supply chains pose a major challenge for regulators looking to ensure sustainable practices and build end-to-end infrastructure in the US and FTA countries.

Blockchain can solve many of these challenges by providing a transparent and secure platform for tracking and verifying the origin of raw materials and manufacturing processes.

From mining raw materials to manufacturing, each transaction can be recorded and verified by multiple parties, ensuring the accuracy and credibility of information. Such greater transparency helps curb smuggling and polluting mining, making it more difficult for companies to rely on morally questionable sources. In addition, it will help solve the recent case of electric vehicles catching fire due to quality control issues, and improve consumer safety.

Widespread use of blockchain

Incorporating blockchain into supply chain systems is no longer theoretical. There are already organizations that have embraced blockchain to track parts of the manufacturing process.

For example, global jewelry company De Beers has announced that it has incorporated blockchain into its business. The aim is to bring transparency to the diamond trade.

The World Economic Forum (WEF) has announced a mission on blockchain utilization with over 100 partner organizations. Entitled “Redesigning Trust with Blockchain in the Supply Chain,” the project is an “open-source tool to streamline blockchain deployment across a wide range of diverse sectors. We are aiming for joint design of the kit.

Projects like this are an inspiration for companies at the forefront of building the EV supply chain. Did the companies that get preferential treatment from the US use clean, renewable energy? Or have we used less clean energy and sourced raw materials from less friendly countries? Has the manufacturer cut corners on safety features?

Blockchain creates data-backed trust. This is critical for an industry that spans multiple continents and currently lacks transparency. The process of tokenization that enables trust will also create new markets as shareholders will be able to own new digital assets.

If the real estate industry is embracing smart contracts for property purchases and tokenizing real estate rights, the EV industry should also be able to leverage blockchain for ethical sourcing within the supply chain process.

Blockchain is shifting from speculative crypto assets to digital assets tied to real-world commodities.

Many stablecoin projects, such as Paxos, are backed by precious metals such as gold, and more and more raw materials such as lithium will follow this trend. This will require a sweeping reform of domestic and international supply chains. Thankfully, the Biden administration just gave me the go-ahead.

Dr. Qichao Hu: Founder and CEO of Lithium Metal EV Battery Manufacturer SES AI, building a highly transparent and intelligent EV battery supply chain.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: CHUTTERSNAP/Unsplash
｜Original: Tokenization Is the Way to Realize Biden’s Electric Vehicle Overhaul