The automotive industry is not one to remain still. A wave of new technologies is about to overtake us. Current trends are revolving around electric cars, autonomous automobiles, and ride-sharing services. But for this industry, innovations are a dime a dozen. The intent is to make the next generation of cars into a feasible reality.
A new chapter in the automotive industry
The latest buzz surrounds cryptocurrency and blockchain technologies. They have become the foundation stone for transformation in a number of industries. As we enter an entirely novel phase of the mobility era, there is much to be experienced. For the moment, blockchain is proving to be the ideal solution for data management.
Automotive companies are collaborating to combine existing technologies with newer concepts. ‘It’s paving roads for AI and IoT to create an enhanced driving experience- and possibly, something even bigger than we’ve ever known before. As Frost and Sullivan report, 10% to 15% of connected vehicle transactions will likely be on blockchain by 2025.
But for now, the swiftest change is the adaption of DLT (distributed ledger technologies). This emerging technology plays a substantial role in the automotive sector through various applications. A study carried out by IBM in 2018 shows that 62% of executives across the automotive industry are convinced by blockchain technology.
Blockchain in the Automotive Industry
If you are reading this article, you are probably already familiar with the terminology associated with blockchain and its benefits. So we won’t go into that again. However, ‘it’s imperative to mention that blockchain in this sector has the power to bolster trust and collaboration among businesses, consumers, and vehicles.
The key aspect of backing blockchain is the shift of control from a centralized operating system to that of end-users. Since all market participants are part of a decentralized network, some advantages that should not be overlooked include:
- a more secure environment where transactions are traceable
- easier access to records
- better transparency of information
These reasons highlight why there is a greater belief in its mechanisms. Therefore, there’s a higher chance of its acceptance. With the passage of time, people will witness a greater adoption of the technology as more opportunities make themselves available to the general masses. The benefits of blockchain are here for the taking.
How is blockchain reshaping the automotive industry
The automotive industry comprises of a complex network of multiple factions. For the ecosystem to remain balanced yet thrive, each branch must grow alongside the rest, incorporating all aspects from design, production, distribution, marketing, selling, financing, and servicing of vehicles.
There are several ways that blockchain can be incorporated in this sector. Here are just a few instances where the technology has gained a great deal of traction. In fact, this is only the tip of the iceberg. This blog could by no means do justice to the numerous implementations that the technology has to offer.
1. Preserving authentic records
The potential behind this technology is paving the way for other applications that will extend beyond simply as a form of making payments. Blockchain can be implemented to secure records, whether about sales or auto designs.
For example, CarVertical is using the technology to keep track of a car’s history, while Volkswagen is also using the technology for tamper-proof odometers. So now data about used vehicles will be transparent with no risk of tampering.
The ride-hailing market will soon surpass other modes of transportation. Blockchain technology could provide a secure digital platform for MaaS (Mobility-as-a-Service). The carpooling system will need to guard identities, personal preferences, and settings in order to enable a protected environment for P2P (peer-to-peer) carsharing.
3. Acceptable form of payment
Since crypto and blockchain often occur hand in hand, digital currencies may well become the preferred medium of payments. Applications include charging/fuelling cars, using in-vehicle infotainment services, toll payments, and much more.
Oaken Innovation demonstrated the practicality of M2M (machine-to-machine) transactions. Blockchain-enabled tollbooths allowed Tesla cars to automatically pay as they passed through toll booths through the use of smart contracts.
4. Promoting cryptocurrencies and tokens
It’s not uncommon for initiatives and startups to use blockchain for transactions and award-based systems. Tokens can be exchanged for commodities and services. So it’s not surprising that businesses, such as autocoincars, aim at facilitating the buying and selling of vehicles all over the world. The technology backing is likely to bring the digital currency into the mainstream.
More importantly, car dealers now have the opportunity to offer their stock of crypto for sale to buyers and investors. Virtual currencies have helped startups and established businesses raise capital. Individuals can cash out their payments in real-time, or hold onto their reserve just like any other asset.
5. Supply chain management
Thousands of parts are needed to manufacture and maintain a car. The process requires an extensive network of individuals, organizations, and resources. But the rapid rate of change has left OEMs (original equipment manufacturers) struggling to keep up. Many times, components are at risk of being damaged, stolen, or replaced.
A DLT between OEMs, parts distributors, dealers, and mechanics could support a digitized car maintenance program, such as that launched by Renault.
6. Authentication of parts
Phony parts have always infiltrated the parts market. Blockchain offers an effective and efficient solution against fraud. Distinctive IDs are available for every part as well as an immutable timestamp when it was created. Parts can be tracked from the day they are produced all the way up the final product.
Innogy SE is exploring the use of blockchain technologies. One of its projects, the Digital Product Memory, aims at giving every product an exact provenance and authenticity.
The automotive space has always been keen on the development of creative technologies, whether it’s to streamline operations, release new end-user functionalities, drive revenue, or something else. So it’s no surprise that the blockchain technology is gaining considerable momentum in this sector.
Recent developments such as the release of MOBI (Mobility Open Blockchain Initiative) brought together major auto industry players, such as BMW, Porsche, General Motors, etc. and premier tech organizations like IBM, Accenture, and ConsenSys. They’re expected to have a significant impact over the coming years.
Blockchain is relatively new and is in the infancy stages as of yet. Only time will tell what heights it can take the automobile industry in the near future.