Automotive innovations have underpinned the growth of the automotive industry over the last century. However, innovation has stalled recently as original equipment manufacturers (OEMs) increasingly focus on refining existing technologies rather than increasing the risk of disruptive change. With the advent of autonomous, connected and electric technologies, the automotive industry has now become an incubator for major innovations. Several major innovations have fundamentally changed the automotive industry, including in-vehicle and out-of-vehicle technologies such as touchscreen human-machine interfaces (HMI), knob-less actuators, mobile phone apps, precise navigation, in-vehicle entertainment services, in-vehicle e-commerce, and seamless charging infrastructure. At the same time, OEMs are also focusing on developing cars that are controlled by software rather than driven by hardware. Moreover, innovations such as shared cars and ride-hailing services, which were considered futuristic decades ago, have become a reality in the current era. Automakers are increasingly billing themselves as providers of mobility services, rather than just manufacturers and sellers of vehicles.
While the automotive industry may appear resilient and stable to outsiders in other industries, the industry is fraught with challenges due to disruption from unicorns such as Tesla, Nio, Rivian and Lordstown Motors. At present, the valuation of auto brands such as Tesla is three times that of traditional automakers such as Toyota, and the sales volume is only one-twentieth of Toyota. This essentially explains the root cause of the difference in valuations among industry occupants, namely the technological maturity gap, which is also considered by industry proponents to be an indicator of technological revolution.
The million dollar question that fascinates us is "What are these changes?". To answer this question, we need to explore both the superficial and fundamental changes that have taken place in the industry. A closer look reveals that industry stakeholders are not only leaning toward technological change in the car, but also introducing new business models, carving out a niche for themselves in the industry. Some of the fundamental changes that are redefining the industry landscape include 1. The rise of ride-sharing and car rental. 2. Emergence of mass market electric vehicles (smart mobility solutions). 3. The evolution of smart, connected and autonomous vehicles.
However, the industry needs a strong enabler to continue its momentum, especially considering that the new automotive ecosystem is vast and involves multiple stakeholders such as customers, automotive OEMs, government agencies, third-party service providers dealers, dealers, etc. And, with such complexities lurking in the industry, transactional transparency, information (data) management, and collaboration with various business partners are of concern to industry players. Additionally, a trusted technology backbone is essential to accelerate the implementation of new business models.
"56% of OEMs and 52% of suppliers agree that the blockchain investments their companies choose to make will be highly influenced by the opportunity to develop new business models." - IBM
Mobility as a Service (MAAS), usage-based models and other innovative mobility variants require:-
Information Sharing
financial payment
Authentication of participants
transaction tracking
There is an urgent need for seamless, secure, and invariant interactions between service providers, consumers, and vehicles.
Which technology is better suited to do this?
Data collected by vehicles and mobility applications using built-in sensors and third-party retrofit solutions has huge potential for the benefit of all stakeholders. This data can be used to develop new business models to reduce costs and provide a superior customer experience. Technologies such as artificial intelligence, big data, and the Internet of Things, combined with blockchain, will bring enormous impact and opportunities to stakeholders in the automotive industry.
“The car is the fourth screen and the next big data battleground. It’s a trillion dollar jackpot.” – MOBI CEO Chris Ballinger
On the other hand, under the General Data Protection Regulation (GDPR), both the car owner or the driver have the right to make their own decisions and dispose of the personal data generated in the car. In the past, OEMs believed that the data stored and transmitted by the vehicle into their systems belonged only to the vehicle, not driver-related data, thereby making the data inaccessible to the driver. Additionally, the ambiguity of the GDPR has led to legal gray areas. Therefore, it is necessary to:
Manufacturer-independent standard and vehicle data platform for general and normative access to data
A data storage system that is transparent, immutable, secure, and access governed by the laws of the land.
Lately, technology startups and tech moguls have tended to adopt disruptive and challenging methods of doing business. This can be understood by the fact that:
Tesla is now worth nearly five times that of Volkswagen, more than seven times that of General Motors, and 14 times that of Ford Motor Co.
Uber, the ride-hailing company, is worth more than Ford Motor, General Motors and Fiat Chrysler.
Tech companies like Google and Apple have put a lot of effort into it. For example, Google formed the Waymo division to develop and sell self-driving cars to consumers globally. Apple is working on self-driving car tech for passenger cars, plans mass production in 2024
Automotive OEMs and technology companies are now facilitating real-time vehicle monitoring, auditability, and scalability. These factors are likely to drive the adoption of blockchain technology in vehicle connectivity, cybersecurity and autonomous driving. Additionally, mobility, supply chain logistics, retail, leasing, smart manufacturing, connected living, IoT, and connected insurance are a few long-term functional areas that automotive OEMs can revolutionize with blockchain technology.
Blockchain is the latest buzzword in the automotive industry. Over the past few years, it has been used to trade cryptocurrencies such as Bitcoin. Research on blockchain and its application in the automotive industry is still in its infancy. The technology is still struggling to reach the masses due to widespread unfamiliarity with its potential benefits. Additionally, a lack of skilled blockchain developers and reduced investment in the technology are both due to sub-par adoption of the technology. However, this technology can solve some of the major challenges in the automotive industry such as vehicle-to-vehicle (V2V) communication, secure data transactions, location tracking, and serve as a reliable gateway to enable new services such as ride-hailing, self-driving cars wait. The silver lining behind the dark cloud is that the current trend of rapid industry disruption may spur blockchain adoption.
What is blockchain?
Blockchain is a decentralized public network that allows individuals and companies to store and transfer information and currency securely and instantly. The term blockchain refers to storing data in "blocks" of information, which are then linked together to form a permanent "chain." When a new block is added to the chain, it makes the previous blocks harder to modify, which helps each block become more secure over time. Several aspects of blockchain technology make it unique and valuable for all levels of automotive business applications.
Every blockchain has three basic parts: –
Records: This can be any information.
Chunk: A group of distinct records.
Chain: This contains all blocks chained together.
The basic principles of blockchain work are explained as follows:
Why blockchain is in the automotive industry
In a blockchain, virtually any file or asset can be represented in code and referenced by a ledger entry, which fundamentally means that blockchain technology has broad applicability. Some basic principles of how blockchain works are as follows:
Immutability - It is nearly impossible to make changes to the blockchain without being detected, increasing confidence in the information it carries and reducing the chance of fraud. Once data is created and stored, it cannot be edited or deleted, i.e. the ledger cannot be changed or altered.
Transparency – transactions are visible to all participants, identical copies are maintained on multiple computer systems, which increases the ability to audit and trust information. Additionally, it can track every system detail.
Security − It uses encryption and decryption methods. Data recorded with a timestamp cannot be tampered with or changed. Additionally, once data is stored, it cannot be overwritten or manipulated. Since multiple participants share a blockchain, it has no single point of failure and is resilient in the face of disruptions or attacks.
Efficiency – As there is no third party involved, transactions happen directly, saving time and money.
Near Real Time - Settlement of recorded transactions occurs almost instantly, eliminating disagreements and reducing risk.
Whether it's assembly line production, advances in combustion engine (CE) technology or the introduction of autonomous and connected cars, the automotive industry has a history of turning every challenge, every adversity, into opportunity.
The past few years have been particularly difficult for the industry. Stricter regulations, supply chain disruptions due to trade conflicts, a host of such challenges, etc. have impacted the industry's growth curve. It was then adversely affected by the COVID-19 outbreak, making it one of the hardest hit industries.
Over the past few years, in response to these challenges, the automotive industry has played a huge role in innovation in product offerings, superior customer experience and efficiency gains, resulting in savings in the most challenging economic times. Digitization inside and outside the car plays a pivotal role in the development of the automotive industry. In-vehicle digitalization includes vehicle connectivity (V2X), entertainment, turn-by-turn navigation, in-vehicle e-commerce and a range of third-party services. There will be several applications available in the automotive operating system, which will provide many use cases for every requirement of the customer. The home/office automation IoT ecosystem will integrate with the car's operating system to create a seamless experience that spans customers' daily lives. These changes will lead to better utilization of the car and drive the need for these convenience systems in the next generation of vehicles.
Digitization outside the vehicle will encompass the management of the customer's cradle-to-cradle journey. OEMs will drive this across all their touchpoints (offline and online). A completely seamless and personalized car buying experience from the convenience of your home has become the focus of digital today. Another important area of digitization will be in after-sales service, supply chain, regulatory compliance, recall management and asset management. These synergistic and convenient features will drive the growth of the automotive industry. Besides blockchain, what is the best technical framework to support this multi-stakeholder trust ecosystem. Using blockchain, we can improve quality, reduce costs, eliminate waste and predict problems.
So everyone in the automotive industry is exploring the first major blockchain innovation. The most anticipated innovation could create a compliance and conformity traceability platform for the entire automotive industry.
Blockchain Use Cases - Automotive Industry
So, should blockchain be a priority for the automotive industry? The automotive industry is investing heavily in autonomous driving, ride-sharing, battery electric vehicles, on-board/off-board digitization, and more. Should they now redirect some of their research budget to a technology that is still in its infancy? We investigate this issue in subsequent chapters.
But before we go any further, we should take a closer look at what we know about blockchain. In short, it is a technology that enables secure decentralized transactions with little or no intermediaries. Blockchains are based on decentralized databases, transaction histories, consensus mechanisms and automatic digital contract execution in which transactions between participants occur and are recorded. Every transaction on the blockchain is permanently recorded and any attempt to tamper, steal or falsify any record is immediately highlighted. The blockchain itself does not store information, but rather records proofs of transactions, known as transaction "hashes."
It is this unparalleled security that creates the blockchain associated with transactions that require an audit trail. Blockchains are very hard to break. To hack into a blockchain, you need unrealistic amounts of computing power. Thus, this technology provides universal evidence of anything that has happened and been recorded.
Since early 2017, a growing number of automakers have been conducting proof-of-concepts for blockchain technology to become pioneers of the technology. The Mobility Open Blockchain Initiative (MOBI), launched in May 2018, aims to accelerate adoption of the technology. But the question is, where and how should automakers, suppliers, dealers and customers participate in blockchain? Let’s find out.
In the fractional ownership blockchain example, we can see how these concepts might apply to car rentals, ride-hailing, autonomous driving, and more. Some recent live blockchain use cases are listed below to better understand the applicability of blockchain in the automotive industry.
BC Mobility & Logistics (Blockchain Solutions Ltd.)
BC-based transportation smart key solutions built on data generated by smart devices can record driving data and manage car sharing transactions, including transaction access rights), monitor vehicle information for car-related business cases (insurance, DOOH advertising, car rental, car report) on integrated infrastructure.
Blockchain-enabled toll booths (Oaken Innovation)
The idea/test of an automatic payment when a Tesla car goes through a tollbooth, since both nodes (the car and the tollbooth) have Ethereum nodes that use smart contracts to trigger Machine-to-Machine (M2M) transactions.
toyota
Toyota Motor Corporation and Toyota Financial Services launched the Toyota Blockchain Lab on March 16, which includes six Toyota group companies. Toyota Labs explores what the future of the auto industry might look like. Blockchain Labs has been researching the potential of blockchain technology. The group is now looking to accelerate initiatives to advance business implementation and expand strategic partnerships outside the group. The sole goal of Toyota's nearly year-long foray into blockchain technology is to shift the group's focus to becoming a more comprehensive mobility company, offering a broad range of transportation-related platforms. To achieve this, it intends to use blockchain to develop an environment where users can more openly and securely connect with the companies that provide their services.
volvo
Martina Buchhauser, Head of Purchasing at Volvo Cars, said: "With blockchain technology, we can take the next step to ensure that our supply chain is fully traceable and work closely with suppliers to maximize minimize any associated risks.”
Volvo Cars will become a major automaker implementing global traceability of the cobalt used in its batteries by applying blockchain technology. Traceability of raw materials used in lithium-ion battery assembly, such as cobalt, is one of the major sustainability challenges faced by automakers. Volvo Cars has achieved full traceability, ensuring customers can drive an electric Volvo with responsibly sourced batteries. Blockchain technology establishes a transparent and reliable shared data network, which greatly improves the transparency of the raw material supply chain, because the information about the source of the material is immutable.
Volkswagen
Volkswagen is currently testing an odometer system that would make the odometer difficult to change, helping to make the used car market more transparent and secure. Therefore, the preservation rate of second-hand cars is higher. Customers can permanently save their odometer readings through a classic system that cannot be changed retroactively without anyone noticing they need to be manipulated.
modern
The company’s spare parts subsidiary Hyundai Mobis has launched an alternative MAPS (Most Advanced Parts System) software platform that uses blockchain to distribute aftermarket parts for its 300 Hyundai and Kia brand vehicles.
The system will support inventory and distribution planning for approximately 3 million parts, as well as verify, forecast demand and track 65 million parts per year across Hyundai's sales network of 200 countries.
The system will be used by about 100,000 people, including 35,000 parts distributors and repair shops and 16,000 dealers, for "parts procurement, logistics and quality control". Blockchain technology is being used as a pilot for product authentication.
BMW
The BMW Group uses blockchain technology to ensure the traceability of components and raw materials in a multi-stage international supply chain. The "Verified Car" project launched by BMW in cooperation with the blockchain platform VeChain consists of a vehicle digital passport. Verify Car will add more transparency when users want to view the history of their BMW vehicles.
General Motors
General Motors has used blockchain to enhance its current navigation system. A blockchain-based in-vehicle navigation system will share the vast amount of knowledge collected while the car is driving in the city. Data collected in real-time via this blockchain technology will then be used with discrepancy detectors that will check incoming data using existing maps.
Any discrepancies detected are transmitted to the blockchain network, allowing cross-checking if other moving vehicles observe the same pattern.
other apps
car property transfer
Simplify the transfer of vehicle title from buyer to seller by digitizing and securing title, speeding up the time required to verify, validate and transfer title to a specific asset.
supply chain management
It will enable more transparent and accurate end-to-end tracking in the supply chain. Organizations can digitize physical assets and create a decentralized, immutable record of all transactions, allowing purchases to be tracked from production to delivery or end-user consumption.
smart manufacturing
Blockchain can be used for on-demand manufacturing, smart forecasting, inventory management and solving ownership issues.
Insurance and Insurance Claims Processing
Provides customized insurance quotes and premiums, and streamlines claims processing (documentation, submission, review of resources, verification) and subsequent payments and service contracts associated with financing and performing repairs.
Loyalty-based microtransactions/infotainment
Rewards programs to drive customer engagement, retention and additional revenue across industries. Provides a valuable add-on to infotainment technology by securing in-vehicle payments for movies, apps and other services.
Auto Financing Process
Simplify lending and financing processes (customer bank verification and transaction setup and execution, issuance of letters of credit, review of multiple documents from different locations, risk scoring and classification, and archiving of review documents).