Putting Blockchain in the Driver’s Seat
An analysis on how blockchain technology can be an enabler in the automotive industry beyond the obvious supply chain and operations use cases.
The automotive industry is already being disrupted by electric, autonomous and connected vehicles. These technological innovations are fundamentally changing how the automotive industry is being perceived. With all these innovations and disruptions already happening, here comes another kid on the block to disrupt the industry further — blockchain.
Do we need another disruption in the automotive industry at this time? Should we distract ourselves with blockchain when we are still trying to get the best out of other major innovations? The answer, in my opinion, is yes. Instead of looking at blockchain as just another new technology, we should be looking at it as a different way of doing things.
There is plenty of text on what blockchain is and how it works — I won’t go into that. Instead, I would like to focus on how blockchain can be an enabler for other innovations. Let’s see how introducing blockchain in the automotive industry, specially in the areas of electric, connected and autonomous vehicles makes a difference in each of these scenarios.
Electric Vehicles
For electric vehicles, blockchain can impact primarily two areas.
- Peer-to-peer markets and ecosystems — All electric vehicles need charging and, hence, electricity. With electricity being produced by individuals using rooftop solar panels and wind mills, we need peer-to-peer markets for exchange of this energy between the producers and consumers. Blockchain technology can help because secure and peer-to-peer value exchange can be easily built with it. [1] One example is Power Ledger for P2P energy trading using blockchain.
- Tokenized carbon credits — Carbon credits can be tokenized and exchanged using blockchain [2]. Imagine you getting carbon credits for using an electric vehicle and then spending it for using a fossil fuel. In this case, blockchain can help bridge the gap between carbon markets and automotive markets by creating a trusted medium for exchange of tokens representing carbon credits.
Autonomous Vehicles
Autonomous vehicles, at their core, are based on artificial intelligence. At their present state, they are hardly accurate enough to be used in practical conditions. One reason for that is lack of availability of quality data which can help train the AI models to higher accuracy. It is estimated that more than one hundred billion miles of human driving data is needed to get good enough accuracy on autonomous vehicles [3] and it cannot be produced at a single source.
Following is an excerpt from the BigchainDB blog post envisioning a decentralized data exchange for sharing autonomous vehicles data sets.
“While no single entity will be able to reach one trillion miles in the near future individually, by sharing data within the mobility ecosystem to help improve the AI and ML learning algorithms faster, we can also make autonomous cars faster and safer, ultimately saving lives.”
In order to get better accuracy in autonomous vehicles, we need more data. The primary reason for not getting enough data today is that the data producers are not able to share it in a trusted and transparent environment. To provide this transparent data sharing ecosystem, we need blockchain based decentralized data exchanges. This way, blockchain becomes an enabler for autonomous vehicles by helping them reach faster to the market.
Connected Vehicles
Connected vehicles have been around for quite some time now and they are still disrupting the industry like no other tech. The primary reason for that is connected vehicles provide plenty of data and a platform for a lot of new use-cases and markets to flourish on top.
Connected vehicles are source of a lot of quality data. Most of the time this data resides in centralized databases behind the respective vehicle OEM’s firewalls. This kind of access control is needed for security reasons. But when it comes to using this data for several other purposes like insurance, services, audits, verification, etc., then this centralized storage cannot be trusted. The data needs to be tamper resistant and easy to access in order for third-party service providers to rely on it. With it’s immutability and security characteristics, blockchain can provide a much more trusted environment for connected vehicles data.
Some of the advantages of blockchain for connected vehicles are:
- Less odometer frauds because the vehicle data becomes immutable.
- Better insurance services and faster claims because the data can be trusted.
- Management of rented vehicles — smart payments, better security.
More use cases
Apart from the above mentioned use cases of blockchain in electric, connected and autonomous vehicles there are several other well known use cases blockchain in the automotive industry,
- Supply chain — authentic spare parts
- Vehicle registration and life-cycle management — single source of truth for vehicle sales and ownership data
- Smart manufacturing and operations
Economic Impact
The aforementioned blockchain use cases can result in a remarkable economic impact on the automative industry.
Odometer fraud
Following is an excerpt from one of the reports published about odometer fraud in the US.
There are more than 190,000 cases per year of odometer tampering in used cars, costing car buyers $760 million in lost value and unexpected repairs. [5]
With vehicle data being immutable using blockchain, odometer frauds become practically impossible, hence saving millions for the vehicle owners and the overall industry.
Fake parts
While the report from which the following excerpt is taken is from 2013, the fake parts problem has only increased in the last few years.
The problem is also significant in the US automotive sector. According to the Automotive Aftermarket Suppliers Association (AASA), the US industry loses around $3 billion annually as a result of service parts counterfeiters. The AASA estimates the global industry loss to be around $12 billion. [6]
With blockchain enabled supply chain and operations for vehicles, the authenticity of the vehicle parts can be easily verified, hence curbing fake parts in the market.
Operating Expenses
In any industry, up to 1/3 are operating expenses and huge savings can be achieved when processes can be easily audited. Blockchain based operations drastically reduce the audit and conflict resolution costs. [7]
Conclusion
I’ve reviewed a few scenarios in the automotive industry in which blockchain technology can be an enabler for other innovations and how it can have a much bigger economic impact on the industry. I hope this has helped you get a bigger picture of blockchain applications in the automotive industry.
This, by no means, is an exhaustive list and we will (hopefully) see and learn about more use cases in the near future. If you have seen or know of any other automotive blockchain applications, please feel free to add in the comments.
References:
- P2P Vehicle Charging: Is blockchain a driver of EV adoption?https://powertechresearch.com/p2p-vehicle-charging-is-blockchain-a-driver-of-ev-adoption/
- Now, blockchain can turn carbon credits into tokens for trading.
https://www.computerworld.com/article/3277207/blockchain/now-blockchain-can-turn-carbon-credits-into-tokens-for-trading.html - BigchainDB and TRI Announce Decentralized Data Exchange for Sharing Autonomous Vehicle Data
https://blog.bigchaindb.com/bigchaindb-and-tri-announce-decentralized-data-exchange-for-sharing-autonomous-vehicle-data-61982d2b90de - 10 Applications for Blockchain in Connected Car Automotive
https://igniteoutsourcing.com/publications/blockchain-automotive-industry/ - Odometer fraud costs car shoppers millions
http://www.chicagotribune.com/classified/automotive/chi-odometer-fraud-costs-millions-20131213-story.html - Counterfeit parts are costing the industry billions
https://automotivelogistics.media/intelligence/16979 - Blockchain 2017: cost savings have started
https://medium.com/cartaxi/blockchain-2017-cost-savings-have-started-3986c5612ff7
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