Blockchain Technology Future in Automotive Industry

Introduction

The benefits that blockchain can bring to the automotive ecosystem, both in facilitation collaboration between participants and enabling capabilities for new mobility business models, have gained the attention of automotive managers. In addition to enabling a single source of data, blockchain can facilitate transactions between devices, smart contracts and real-time processing and settlement. For the automotive industry, this translates into improvements and operational efficiencies in areas such as supply chain transparency, financial transactions between ecosystem participants, authentication access to cars, customer experience, and loyalty.

The scenario of blockchain in the automotive industry

Various emerging technologies that have had a huge impact on other industries may have passed through the automotive industry, but when it comes to blockchain, there are already several companies investing in the technology. According to an IBM study published in late 2018, 62% of automotive executives believe blockchain will be a disruptive force in the automotive industry by 2022. The same study also determines that 54% of Auto Pioneers plan to perform their first commercial blockchain network at scale within the next three years.

The automotive Ecosystem

The automotive industry has evolved into a sophisticated ecosystem that includes traditional established industrial enterprises, associated industries such as logistics and insurance, new mobility entrants and consumers. It used to be a very simple linear structure supplier, OEMs and dealers whose main focus was building and selling vehicles, has evolved into a network of traditional and non-traditional companies across

multiple industries, all with the goal of providing people movement solutions and improve your mobility experience. In addition, consumers now have a greater role in the ecosystem as active participants influencing how they will own or use vehicles, what types of personalized features and functions they want to have available in the vehicle and even how the vehicle can be a connected device that connects them to other areas of their lives.

Unlocking the potential of blockchain

Although most respondents are not yet experimenting with blockchain, the industry is aware of its potential impact: Two-thirds of executives (61 percent OEMs and 62 percent of suppliers) tell us that blockchain will be a disruptive force in the industry over the next three years. As blockchain networks begin to engage a integrate with other business networks, opportunities to provide new services and generate new sources of income. Doing business in the automotive ecosystem is complex and so is the flow of information error-prone. For example, a shipment of a vehicle from the factory to the dealership usually involves many participants, logistics service providers, port authorities, and shipping companies. The information is held in disparate, unconnected systems, and paper-based processes still prevail. The ability of participants to act among themselves is limited by informational friction points throughout the process. The result is:

Imperfect information. Logistics participants in the transaction do not have access to the same information. Too often, information can also be incorrect or inconsistent, leading to bad decisions or shipping delays during reconciliation.

Information risks. Technology risks to information, from hacking to cybercrime, and privacy concerns are on the rise. These cause rising costs as well as brand damage to reputation.

Inaccessible information. The potential value of numerous data and information is greatly constrained by the technical challenges of analyzing and storing, processing, and sharing the abundant data. Also, some information still exists in manual form.

Blockchain can transfer the information model from error-prone to value-add. It uses a replicated ledger that is divided by all members instead of each member having its own individual, private version. Information becomes a longtime history of an asset (such as a vehicle) or transaction and is clear to all. Transactions are recorded and cannot be changed, and companies can keep their processes private as information is permitted only to those who need it.

Automotive executives studied tell us blockchain can have a huge impact on improving information friction points. 55% of OEMs and 47% of suppliers declare implementing blockchain will overcome imperfect information in their business networks, while 52 percent of OEMs and 40 percent of suppliers tell us that information risks can be improved. Finally, 43 percent of OEMs and 29% of suppliers say blockchain will improve the ability to access information needed for a particular transaction.

Blockchain Gaining Momentum: Automotive Industry

Perhaps the clearest manifestation of the blockchain revolution gaining momentum in the automotive sector is the launch of MOBI (Mobility Open Blockchain Initiative) in May 2018, which brings together major car manufacturers (BMW, General Motors, Ford and Renault) and leading blockchain and technology startups and premiers. organizations such as IBM, Accenture and ConsenSys. NGOs and academic institutions such as the World Economic Forum and Berkeley Blockchain are also involved.

In February 2019, a two-day colloquium took place at the BMW Group IT Center in Munich, where all MOBI members gathered. The event was primarily intended to promote and develop common standards for the application of blockchain and distributed ledger technologies (DLT) in the mobility industry.

MOBI’s founders hope to use blockchain technology to shape a future of mobility that will be greener, safer and improve the quality of life in cities. To achieve this, standardization efforts must be made. Only with a set of clearly defined universal standards can stakeholders develop an open, independent platform that would enable industry-wide applications of blockchain technologies.

Blockchain: Car Manufacturing

Supply chain management. Auto parts could be lost during delivery, stolen, replaced, damaged, etc. Blockchain would allow the manufacturer to fully track these pieces. In the event of a recall, the blockchain would also facilitate procedures: since it carries information about the origin of the piece, we could check whether it had been modified or had a manufacturing defect.

Manufacturing process. There are many opportunities to use blockchain technology throughout the automotive manufacturing process. We can use blockchain to store data from bills of lading for vehicle components and quality control records created during the manufacturing process to WIP information for each vehicle assembly from start to finish.

Finance. All processes that require manual data entry, involve transactions or transaction costs, and revisions among others could be streamlined. Blockchain would speed up these processes and keep them updated throughout the life cycle of the car.

Vehicle safety and data security. The more connected a vehicle is, the more susceptible it is to potentially deadly cyber attacks. Blockchain’s strong cryptographic roots, which cannot be reverse-engineered, make it an ideal place to store data because it cannot be changed.

Telematics. In the connected automotive space, telematics includes software navigation, vehicle-to-vehicle (V2V) communication, and a number of other services that can impact vehicle and passenger safety. We can use blockchain to ensure the security of data sent and received by telematics systems. An increased level of encryption prevents hackers from viewing or using this data.

Smart insurance. Blockchain technology enables unmanipulated and transparent logging of vehicle sensor data in a decentralized network. This flawless blockchain “black box” documentation could help unravel the circumstances of the accident, especially when it comes to autonomous vehicles. Blockchain could also enable insurance to other vehicles, such as a user profile, for example in car sharing.

Blockchain for car owners

Buying or selling a car. For car owners, blockchain-based registries would make it easier to verify a vehicle’s history (e.g. whether it has been in an accident), allowing for great transparency when buying a car. Another pro would be an overview of the vehicle’s parts: users could look up the origin of the carpets and solve problems related to repairs. Not to mention, thanks to the smart contract, the seller and buyer could enforce the transaction of goods without the need for an intermediary.

Examples of blockchain use in the mobility sector

Vehicle leasing and financing. Thanks to smart contracts on the blockchain, we were able to optimize and automate various processes in the vehicle leasing and financing section. For example, if the lease rate of the car has not yet been paid, it is possible to prevent its use by deactivating the unlocking system.

Car sharing. Blockchain technology could enable secure digital identity in carsharing. Thanks to blockchain, personal settings and preferences can be safely stored in the car, avoiding exposure to unnecessary parties. This could also enable P2P carsharing. Meanwhile, the blockchain could make the carsharing process easier for users, as a single registration in the blockchain ecosystem is good to use for all carsharing offers from different service providers in the ecosystem.

Car rental. Blockchain would allow the rental company to track if the cars are being cleaned, maintained, etc. It would be easier to know what is going on, have tracking and decide whether or not to account for that particular car.

Examples of blockchain initiatives in the automotive industry

We can already find a number of different blockchain initiatives from leading manufacturers. Ford, for example, launched a blockchain pilot project on the IBM platform to ensure ethical sourcing of cobalt. By tracking the cobalt supply chain on the blockchain, Ford hopes to ensure companies don’t use child-mined cobalt in lithium-ion batteries.

Volkswagen is building a blockchain-based tracking system to prevent odometer fraud, which is widespread in the auto industry. Ensuring that rogue car dealers cannot manipulate odometers to produce misleading mileage figures will help buyers save money.

Hyundai has announced a new partnership with IBM to advance the use of blockchain technology and cloud-based artificial intelligence. IBM will focus on creating a new supply chain finance ecosystem using the open source Hyperledger Fabric. The goal of the project is to automate manual processes, reduce costs and delivery times and thus improve the customer experience.

Through the MOBI initiative, General Motors and BMW are supporting blockchain technology to share self-driving car data with each other and other automakers. MOBI’s blockchain standardization efforts also take us a step further in the wider adoption of blockchain in the industry.

Conclusion

Blockchain technology offers a real opportunity for car manufacturers to abandon their current incompetent business practices and adopt new and more efficient ways of doing business. There are already existing some interesting blockchain evolution in the automotive industry. Blockchain provides an unprecedented level of control to end users from component suppliers. All organizations will benefit from the immutability and built-in authentication that blockchain-based systems promise, and it’s no surprise that automakers are making strategic investments in this disruptive technology.

Key takeaways:

• After examining a number of potential use cases for this technology, it is clear that blockchain in the automotive industry has the potential to bring significant benefits to the industry by improving supply chain processes, introducing secure record keeping, streamlining production and supporting other innovative technologies. and trends.
• The emergence and subsequent maturation of the Internet has had a profound impact on the automotive industry, enabling the development of new types of services such as ride-hailing apps such as Uber and Lyft. Blockchain technology could push the development of the automotive industry even further.

References:

1. https://www.coininsider.com/daimler-ag-mercedes-benz-mobicoin/

2.https://internetofbusiness.com/ford-renault-gm-bmw-ibm-co-found-mobi-blockchain-consortium/

3.https://www.ibm.com/case-studies/search

4.https://www.ibm.com/blogs/blockchain/2017/03/disrupting-supply-chain-financing-mahindra/