Blockchain Technology in the Automotive Industry
Since the inception of the automotive industry 1885, the industry has undergone an extensive transformation, all attributed to the rapid development of technology. Cars in the 21st century are still evolving with onboard sensors, autonomous driving, artificial intelligence, among other techniques. Point in case, integration of blockchain technology to automobiles steers the industry to a bold step into the future.
Blockchain technology has disrupted the fintech sector and the supply chain industries, and the automobile industry is not out of reach for the new technology. This guide will explore the state of blockchain technology in the automotive industry, looking in detail at the possible use cases, formed partnerships, and prospects.
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The State of Blockchain in the Automotive Industry
While still at very early stages, blockchain technology has displayed a great potential to play a significant role in the forthcoming industry. In the coming five years, more automobile companies will grow their interest in technology and enhance their exploration into blockchain opportunities.
Many automotive companies have established blockchain to have a massive potential for the advancement of their businesses and are increasingly moving towards technology. A study conducted and published by IBM at the end of 2018 indicated that 62% of automotive leaders had substantial confidence in the blockchain technology to disrupt the industry by 2021. The study also established that 54% of giant automobile companies are planning to launch their first commercial blockchain network at full scale in the coming three years.
Leading automobile manufacturers including BMW, Mercedes-Benz, Toyota, and Ford, among others, are already researching blockchain technology in an attempt to create autonomous vehicles and also achieve various functions, including the truck supply chain.
A body- The Mobility Open Blockchain Initiative (MOBI)-was launched in May 2018, confirming that the blockchain revolution is up and running in the automotive industry. The body brings significant automobile manufacturers (Renault, Ford, General Motors, and BMW) as well as leading blockchain and technology startups. Established financial organizations, including IBM, Accenture, and ConsenSys and NGOs also join the others under a single roof to develop frameworks for implementing the blockchain technology in the automotive industry.
The body also resorted to developing common standards for applying blockchain and distributed ledger technologies (DLT) in the automotive industry after a 2-day colloquium event in February 2019. The event was held at the BMW Group IT Centre in Munich. MOBI founders are looking to leverage blockchain technology to transform the automobile sector into a greener and safer industry to improve the quality of life.
MOBI’s first task is to develop a vehicle digital identity prototype or car passport that can track and secure a vehicle’s odometer, as well as the relevant data on distributed ledgers. This development will, in the long run, substantially cut down on the fraud when buying used cars. Buyers can finally have an accurate vehicle history.
Blockchain Use Cases in the Automotive Industry
Blockchain technology has significant use cases in the automobile industry ranging from car manufacturing, car supply chain, vehicle insurance, transfer of motor vehicle ownership, vehicle recall optimization, and vehicle identification & tracking, among others.
Blockchain Use Case in Car Manufacturing
- Supply chain management- Automobile manufacturers procure car parts/raw materials from all over the globe and sometimes face logistical difficulties in tracking their supplies. Some of these materials are manipulated or stolen as they go through dozens of intermediaries and stations. Blockchain provides efficient means for manufactures to track their supplies in real-time to prevent the parts from being stolen, damaged, or replaced.
- Car manufacturing– Blockchain has numerous uses in car manufacturing, including safeguarding quality-inspection records, store bills of lading for each vehicle component, and also to WIP information for each vehicle from the start of assembly to finishing.
- Telematics– Telematics involves software-based navigation, vehicle-to-vehicle(V2V) communications as well as a host of other services. If left unsecured, telematics poses a challenge to vehicle safety as well as passenger security. Blockchain can be employed in securing the data sent and received by telematics systems.
- Smart Insurance– Through blockchain technology, insurance companies can remotely log in to a vehicle’s system to obtain the sensor data to determine how an accident occurred and why. This will reduce instances of false insurance claims. Also, through blockchain, car insurance will be obtained as a user profile.
- Optimizing Vehicle Recall- Close to 53 million cars are recalled annually in the US due to various issues. For manufacturers, recalling a vehicle does not only create a negative public image but also costs quite a lot in terms of logistics and finance. Blockchain technology can optimize vehicle recall and save manufacturers a fortune plus ensure customers find the process efficient and less complicated.
Blockchain Technology Use Cases in Car Transactions
Transfer of Car Ownership- Transfer of car ownership has usually been marred by fraudulent dealings with false information provided. Additionally, the process is paper-based and often lengthy. Blockchain technology has the capability of transforming this technology and eliminating possible corruption for a win-win case. Already, BigChainDB, in partnership with Innogy and Volkswagen Financial Services( VWFS) have launched CarPass– a distributed ledger platform for collecting and storing crucial information relating to a vehicle to maintain maximum transparency during car transfers.
Blockchain Use in Driving and the Mobility Sector
Vehicle Location Monitoring– Companies owning a large fleet of cars or trucks can efficiently track them using blockchain. They will be able to know the real-time location of a vehicle and even use the data to cut down on expenses.
Autonomous Driving– Autonomous driving can now be achieved thanks to blockchain technology. Current technologies being used in autonomous, including GPS technology, sensors coupled with highly sensitive cameras are not perfect and have even resulted in accidents such as the recent Tesla accident. Blockchain technology will ensure autonomous driving works perfectly since self-driving cars will be able to communicate with each other in real-time. AI, coupled with Blockchain technology, is the next frontier in autonomous driving.
Car sharing/ rental companies/ vehicle leasing– Blockchain will achieve efficient mobility services such as car sharing, car renting, and leasing. Through blockchain technology, car rental companies can be able to monitor their cars and even remotely shut down a vehicle if the rental charge hasn’t been paid or on noticing something suspicious.
Blockchain Already Being Implemented in the Automotive Sector
Several automobile companies have already partnered with blockchain startups to create real-life blockchain solutions. They include:
1. Porsche Partnership With XAIN
Porsche partnered with blockchain startup, XAIN to integrate technology in their vehicles line- Porsche Panamera. Blockchain will be used to allow users to unlock their cars via an app and also provide a more straightforward automated payment system. There is a possibility that the partnership will be expanded further to autonomous driving. The project is currently on the testing stage. Porsche is also working on other blockchain applications, including the areas of charging and parking.
2. General Motors (GM) Partnership with Spring Labs
GM formed a partnership with Spring Labs to prevent synthetic identity fraud. This type of fraud involves creating a fake identity and has been widely used by criminals to take car loans and fraudulently acquire credit cards. GM is looking to implement blockchain technology to stop these frauds and cause the automotive industry millions of dollars.
3. VeChain Thor Partnership with BMW
VeChain rebranded to VeChain Thor and formed a partnership with German automaker BMW. The details of the partnership remain scanty, but analysts say it can take the direction of the collaboration between IOTA and Volkswagen.
4. IBM Developing Blockchain Payment Solution for Vehicles
IBM is working on an automated payment system build specifically for vehicles. The platform, once complete, will automate the payment of charging, parking, car sharing, tolls as well as other payment systems. This technology is set to revolutionize the automotive industry completely.
5. Toyota and MIT Partnership
Japanese automobile giant has partnered with the Massachusetts Institute of Technology (MIT) in an attempt to leverage blockchain to build an efficient vehicle data management system. This system will enable vehicle manufacturers to share autonomous vehicle data in real time and make safe autonomous driving a reality.
6. IOTA and Volkswagen Partnership
Volkswagen partnered with IOTA to use its new tangle technology in its autonomous vehicles. IOTA’s tangle technology enables real-time data updates on various technological devices. This technology goes a long way in implementing autonomous driving. IOTA and Volkswagen demonstrated a Proof-of-Concept (PoC) that uses IOTA’s Tangle system for autonomous cars at the Cebit ’18 Expo in Germany today, June 11th. 2018. Mass production of Volkswagen wars using IOTA’s technology is expected to be conducted this year.
7. Mercedes-Benz Using Blockchain in Supply Chain
Mercedes-Benz has implemented blockchain technology in its supply chain. The German car manufacturer has created a prototype software that tracks vehicles through the entire supply chain and also automates transactions.
8. Renault Employs Blockchain to Keep Customer Data
Renault partnered with Microsoft to create a blockchain-based data storage system. At the moment, Renault’s customer information is being stored in different databases, making it difficult for the company to retrieve customer information quickly. The car manufacturer has started manufacturing its blockchain system with the help of Microsoft.
Blockchain technology indeed has a vast potential of transforming the automotive sector for the better. The technology has extensive use cases in the industry that will benefit not only car manufacturers but also users and other stakeholders such as finance providers.
Applications of blockchain technology in the automobile industry have endless possibilities and can transform cars to be IoT devices. And with more car manufacturers inclining their research and investment towards this technology, the move is instrumental in driving the adoption of blockchain technology in the coming years. With increased blockchain adoption in various sectors, not just the automobile industry, the world would surely be a better place to live in.
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