The evolution of cruise control has led to the development of self-driving cars, which are now commonplace. The next frontier in automotive technology is vehicle-to-vehicle communication, enabling cars to share crucial data about road conditions and planned maneuvers.
With the advent of blockchain, cars will no longer be just a means of transportation, but a key player in the upcoming technology revolution. Automotive software companies are investing heavily in technology development, with Frost and Sullivan estimating a $169 billion spend by 2025, with 0.6% of investments being allocated to blockchain.
So, how can vehicle manufacturers, resellers, and lenders leverage this technology to their advantage?
Blockchain Use Cases in the Automotive Industry
The automotive industry has numerous ways to harness the power of blockchain technology, leveraging its inherent benefits to achieve their objectives. These benefits include:
- Immutability: The data stored on the blockchain is unalterable, making it an excellent tool for keeping secure and tamper-proof records.
- Transparency: The blockchain network is transparent, allowing all participants to access and monitor transactions at any time, making it easier to track the origin of automotive parts or vehicles.
- Permanence: The data stored on the blockchain is permanent as long as the network is operational, making it an ideal solution for long-term record-keeping.
- No intermediation: The decentralized nature of the blockchain eliminates intermediaries, enabling network members to interact directly with one another.
- High speed of operations: Blockchain transactions occur at a faster rate than those in traditional, centralized systems, making it a more efficient option for the automotive industry.
- Data safety: All network members have a complete copy of the blockchain registry, ensuring that data loss is unlikely.
- Data security: The encryption of blockchain records with cryptography ensures that all records on the ledger are secure.
By analyzing each use case in detail, it becomes clear how the automotive industry can use blockchain technology to improve its operations and achieve its goals.
Care Sales and Leasing
When purchasing a used car, it is common for customers to face the issue of inaccurate odometer data. You may end up buying a car that has been driven much more than what the seller claims. However, blockchain technology can offer a solution to this problem.
Since the data stored in the blockchain is permanent and unchangeable, it provides a reliable source for comparing the seller’s claims with the actual information. With the help of blockchain, buyers can easily access any information related to the car, such as mileage, accident history, repair records, and other data that can help them make an informed decision and avoid any wrong purchase. This is just one example of how blockchain can benefit the automotive industry.
In 2015, DocuSign, a transaction management startup, collaborated with Visa to create a proof-of-concept project that used blockchain technology to simplify the car leasing process. This innovative system involved three stages: first, the buyer chooses the desired car and the transaction is recorded on the blockchain’s public ledger. Second, the buyer signs a smart contract from the driver’s seat which contains the insurance policy and lease agreement. Finally, the buyer can hit the road and start driving the car.
Eliminating Counterfeit Car Parts
In 2017, Abu Dhabi authorities confiscated over 500,000 counterfeit auto spare parts worth approximately $4 million in a single day. The sheer quantity of fake pieces confiscated raises questions about the size of the fake car parts market. Nissan’s representatives estimate that the car manufacturer loses about $60 million annually in the Arab Emirates alone due to counterfeit car parts.
Counterfeit auto parts not only result in financial loss for car manufacturers and their official partners, but also compromise human lives, particularly when it comes to airbags. Consequently, there is a pressing need for an effective countermeasure.
One possible solution is the use of unique radio-frequency identification (RFID) tags. By employing these tags, car manufacturers can ensure the provenance of their spare auto parts, track the location of a specific car in their supply chain, and store all the relevant information about the car in a public ledger. According to Matthew Jones from IBM, automotive businesses that adopt blockchain to prove the provenance of their auto spare parts will be able to significantly reduce expenses associated with recall activities.
Auto Insurance
Blockchain technology offers significant advantages for insurance companies, particularly with its immutability and proof of provenance principles. These capabilities can greatly enhance their operational activities.
Smart contracts can help insurers validate submitted information to prevent fraudulent claims or other forms of deceit. With the blockchain, insurance companies can easily verify the accuracy of claims, such as checking whether a car had technical problems before an accident occurred, or validating any other submitted information.
Reuters reports that Toyota, the renowned Japanese car manufacturer, plans to collaborate with technology companies such as MIT, BigchainDB, and Oaken Innovations to develop blockchain-based applications for insurance purposes. This partnership could lead to innovative, usage-based insurance solutions from Toyota in the near future.
Cargo Shipping
The use of blockchain technology in the automotive industry can provide multiple benefits for shipping companies. The shipping industry is complicated due to the vast amount of communication that occurs between various parties, such as transportation providers, freight forwarders, customs brokers, governments, ports, and warehouses. Currently, all data pertaining to the shipping of a particular cargo is stored in the shipping company’s silos, making it inaccessible to clients.
In an effort to increase transparency and trust in its supply chain, global cargo shipper Maersk has partnered with IBM to implement blockchain technology. Through this partnership, Maersk has utilized smart contracts to automate paperwork, such as agreement creation and contract signing. This has enabled the company to eliminate hundreds of point-to-point communications with its automotive supply chain members, making the cargo shipping process more efficient and cost-effective. With blockchain de, any supply chain member can access shipment information, including document submissions, cargo location, possession, and destination.
Blockchain technology provides a secure data exchange and tamper-proof repository for cargo documents and shipping events. This technology can significantly reduce delays and fraud, ultimately saving shipping companies millions of dollars.
Speeding up Self-Driving Development
Tesla has integrated an autopilot feature in their cars, but self-driving cars are not yet perfect and rely heavily on the quality of road markings and sign readability. Developing fully autonomous cars requires a vast amount of data to be collected and processed by vehicle manufacturers.
According to Chris Ballinger from the Toyota Research Institute, blockchain development services in USA can help accelerate the development of autonomous vehicles. By using distributed ledgers and blockchains, necessary data can be efficiently transferred between vehicle owners, researchers, and manufacturers. This will enable car manufacturers to collect the data they need at a faster pace, leading to the production of fully autonomous electric vehicles sooner than expected.
Final Thoughts
Blockchain technology, widely used in the financial sector, holds immense potential for exploration by car manufacturers, resellers, and insurers. However, only a few companies have expressed their readiness to research and implement its capabilities in their businesses.
Distributed ledgers can help automotive companies reduce their expenses on document workflows, prevent fraud, enhance their production, and ensure security for their digital ecosystem in the long run.
By adopting blockchain in the automotive industry, companies can easily comply with regulatory requirements, making the sector more efficient and trustworthy. Although the technology is not fully mature yet, it shows great promise and prepares vehicles for the future, where they will interact with each other and the environment in new and innovative ways.