Blockchain in the Automotive Industry
Vehicles are no longer merely a means of transportation, and blockchain technology is playing an essential part in the coming technological revolution. Discover how blockchain is projected to become critical for the automotive sector making next-generation cars a reality in the coming years.
Vehicles are gradually becoming far more than just the means of transportation. Cars in the twenty-first century are mobile data centers with built-in sensors and computers that collect vehicle data.
By delivering more secure, traceable transactions and improved access to and openness of information, Blockchain has the potential to increase trust and collaboration among enterprises, consumers, and even cars.
According to the report of global opportunity analysis and industry forecast, "The worldwide automotive blockchain industry reached $428.6 million in 2020 and is expected to grow to $5.6 billion by 2030, increasing at a CAGR of 29.3 percent from 2020 to 2030."
Blockchain in the Automotive Industry
The case for Blockchain in the automotive industry is compelling. Opportunities abound across the sector, including Original Equipment Manufacturers (OEMs), suppliers, dealers, financers, and end-users.
When it comes to the corporate operating model, Blockchain may be used in various ways, such as making existing processes more efficient, assisting in the transition into adjacent services and markets, and developing new transformational services.
While Blockchain can be used in isolation, its influence is likely more significant when integrated with other technologies such as big data, the Internet of Things, and artificial intelligence.
Automobile manufacturers make significant investments in technology development.
"According to Frost and Sullivan, a market research firm, such enterprises would spend around $169 billion integrating new technologies in their organizations by 2025, with Blockchain accounting for about 0.6 percent of investments."
Use Cases and Examples of Blockchain in the Automotive Industry
Here is a collection of use cases and examples of how the automotive sector uses Blockchain.
Vehicle mileages may be validated appropriately and safeguarded using the Blockchain, allowing drivers who do not frequently drive to obtain lower insurance prices.
Example - The University of Luxembourg has established a sub-department to investigate how Blockchain may be applied to businesses such as insurance. Its Services and Data Management (SEDAN) research department is developing systems for blockchain-based auto insurance.
Driver information can be safely and securely kept in the Blockchain, allowing a rental car or shared vehicle to be swiftly adjusted to users' preferences, including seat, mirror, temperature, and music settings.
The saved preferences also allow targeted marketing via the infotainment system in shared vehicles.
Example - The Mobility Open Blockchain Initiative (MOBI) was founded in 2018 to coordinate the development of distributed ledger technology (DLT) across the smart mobility industry. BMW, GM, Ford, Hyundai, Honda are among its members.
Recalls and Vehicle Industry
The VIN of a vehicle can be maintained in the Blockchain, which means that if a recall is made, owners of the specific vehicles with a fault can be notified, substantially decreasing expenses for manufacturers and inconveniencing drivers.
Making a vehicle's logbook a part of the Blockchain will make forgery obsolete. Second-hand automobile buyers will benefit since the seller may disclose thoroughly verified, incorruptible data on the car's history. The vehicle's title can be easily transferred to the new owner via the Blockchain.
Example - AMO, a South Korean firm, is developing a blockchain platform that collects and makes all forms of automobile data available to any stakeholder. The initiative's goal is to maximize data collecting and dissemination for the world's app developers, focusing on enhancing the accuracy and efficiency of recall management. MOBI is also a member of AMO.
Blockchain can be employed in the supply chain to verify the source of materials used in manufacturing a car, all the way back to the raw material as soon as it is retrieved from the mine.
This is particularly significant given the recent spike in demand for electric vehicles (EVs), which currently use cobalt in their batteries. Around two-thirds of the world's supplies originate from the Democratic Republic of the Congo, where unregulated mines account for roughly one-fifth of production.
Example - BMW Group has partnered with London-based company Circular to discover ethical cobalt sources using the latter's blockchain-based mapping technology. BMW has announced that its batteries will use cobalt sourced from authorized producers in Morocco and Australia.
An OEM is a company that sells autos on a timeshare basis. Trips are recorded on the Blockchain, and transactions between owners, operators, and third-party service providers are automatically resolved via a single-source, usage-based payment system.
The car's ownership is flexible, and it can be in whole or in fractional shares. Profit shares are distributed to all owners, including the OEM, based on their ownership proportion.
Example - Ernst and Young offers EY Tesseract, a blockchain-based technology platform that enables fundamental peer-to-peer interactions between owners and users, provides a reliable means of selling ownership shares of cars, and keeps an immutable record of ownership and usage payments.
Current Implementation of Blockchain in the Automotive Industry
The world's biggest automakers have collaborated with other technologically adept organizations to integrate blockchain technology into the comfort of your vehicle.
- Ford has started a blockchain trial to assure ethical cobalt sourcing. Ford hopes that tracking the cobalt supply chain on the Blockchain will ensure that companies are not utilizing child-minding cobalt in lithium-ion batteries.
- Volkswagen is also working on a blockchain program to combat speedometer fraud, common in the automobile sector; making sure that dishonest car vendors cannot modify speedometers to obtain fraudulent mileage values will aid purchasers in saving money.
- Hyundai is also investigating the application of blockchain technology and cloud-based AI by developing a new supply chain financing ecosystem. The initiative intends to improve the customer experience by automating manual operations, lowering costs, and shortening lead times.
Three Significant Challenges
Blockchain technologies provide numerous advantages to the automobile industry payments, including easy-to-track operations, tamper-proof transaction records, and lower transaction fees. However, three things should be given special consideration when designing any blockchain-based product.
Companies must protect sensitive information from public disclosure. Adjust the transaction visibility settings to achieve this.
Blockchain technology raises the bar for code quality. Aside from the substantial danger of money loss, it is difficult and costly to repair smart contracts after being deployed. If the contract's code is redundant or inconsistent, it may perform poorly and be challenging to support.
Before migrating your financial activities to a single blockchain-based platform, ensure that all your vendors and subcontractors can and will participate.
While the Blockchain still lacks defined governance, you can always create a secure and compliant solution using appropriate cybersecurity and financial industry standards and regulations.
As a safe and one-of-a-kind form of encryption, Blockchain has the potential to be one of the crucial technologies that enable the automobile sector to enter the new era of intelligent vehicles.
Whether it's by safeguarding financial information or increasing the trustworthiness of shared ownership, Blockchain has the potential to transform the way data is maintained in future cars - and it's worth paying attention to.