Blockchain technologies and crypto payments have already disrupted e-commerce and financial services. Now they’re beginning to disrupt and empower the auto industry, too. Carmakers have always competed by finding and marketing technological advances. Now they’re scrambling to win the blockchain race by offering new features and functions, including ride-sharing, self-driving vehicles, parts authentication and much more.
- Blockchain is the best way to manage the large volume of data from Internet-connected vehicles
- Big manufacturers want to manage vehicle data standards, even if they can’t control the data itself
- MOBI and other industry projects are developing blockchain-enabled platforms quickly
- Developers and investors can profit from any innovation that helps owners make their vehicles more “self healing” for repairs and maintenance, easier and safer to drive, or easier to pay for sales, services, tolls and other fees
Internet on wheels
For many drivers, both commercial and private, the car is like a home. Some people live in their vehicles full-time. Retirees, regional salespeople and working nomads all spend many hours in vehicles equipped with Internet service.
With the growth of IoT, cars are quickly becoming Internet-on-wheels. Blockchain is the best way to record, analyze and use the truckloads of data produced each day.
Let’s look at how the auto industry and supply-chain companies are embracing crypto and blockchain technologies, how they’re managing vehicle data, and what it means for consumers, drivers, investors and developers. We’ll highlight some potential ways that you can benefit.
Automakers want to keep a firm grip on the steering wheel, but….
Cars are the next battleground for data. The big automakers are highly competitive among themselves, and they’re eager to control the valuable data flows from vehicles before tech players like Google, Apple and Amazon hijack the bus.
Amazon puts Alexa in cars, while Microsoft and Google each have their own automotive blockchain development projects. By having an early leadership role in setting all vehicle data standards, the big automakers can profit and consumers may benefit.
…..they know vehicle data needs to be shared
After decades of dealing with vehicle recalls and other customer-service headaches, auto industry leaders are cautious. They’re painfully aware that drivers, insurers and transportation regulators must also have their hands on the data steering wheel, too.
When data control is concentrated in too few hands, and property rights aren’t clear, it’s contrary to the blockchain ideal of decentralized community participation. If placed under centralized control, vehicle data silos at big auto companies could get bigger, but without being easily accessible to consumers.
Players in the automotive industry have joined together in several projects intended to lay a common foundation for technology standards and encourage the development of automotive and logistic blockchain projects. If they can’t drive the bus, at least they’re “riding shotgun.”
MOBI and other automotive blockchain initiatives
Automakers, parts manufacturers and technology companies agree that applications should be based on common standards for safety and interoperability. To achieve that goal GM, BMV, Ford and Renault and others have joined together into the Mobility Open Blockchain Initiative (MOBI).
MOBI features more than 35 participants, including Bosch, ZF and other parts manufacturers, plus Hyperledger, ConsenSys IBM and IOTA. Other notable MOBI members include Aioi Nissay Dowa Insurance, Accenture, Dashride, ContextLabs, Deon Digital AG, Dovu, Chronicled, Crypto Valley Association, NuCypher, Foam, MotionWerk, Oaken Innovations, ShareRing, Ocean Protocol, Shift, Spherical Analytics, and the Trusted Internet of Things Alliance.
All are committed to collaborative blockchain development, and each is worth watching by investors and app developers.
One of MOBI’s stated goals is to use blockchain as a tool for decentralizing vehicle data instead of locking it away in silos. The plan is to create and document data property rights for the owner, whether that’s an individual driver, fleet owner or government entity.
Since privacy control and data democracy are such important issues, there will be many opportunities for independent developers of payment gateways and other third-party apps to bridge the “last mile” between MOBI and drivers.
New benefits from automotive blockchain development
With the increasing use of autonomous cars and driverless delivery vehicles, developers’ focus is on apps for vehicle interaction and communication. Automakers, parts suppliers, OEMs, dealers, customer service, mechanics, and insurance companies are all eager to develop secure shared databases for manufacturing, logistics and support.
Blockchain’s shared-ledger capability together with Internet of Things in vehicles is expected to lead to cars which are “self healing” in the sense that they will detect the need for replacement parts and maintenance, then query the warehouse for parts availability, and contact the mechanic’s shop to schedule an appointment. Blockchain will likewise be responsible for verifying the qualifications of repair technicians, authenticating replacement parts, and processing payments.
Common standards for interoperability
Although the auto industry is highly competitive, the big players all agree that common blockchain technology standards are necessary to ensure development is both secure enough for data privacy, and safe enough for consumer use on the roadway. When considering things like digital wallets, toll systems and ride-sharing apps, it doesn’t make sense for each carmaker to develop a separate platform.
Instead, industry leaders want to build using common blockchain standards and APIs. This is critical for technologies like batteries, fuel cells and onboard safety equipment.
Vehicle sensor data
Automakers also want to use distributed ledger technology to gather, analyze and use data from vehicle sensors. Internet-connected cars nowadays are producing about 25 gigs of data per hour, and autonomous vehicles will soon produce much more from onboard sensors for light detection and ranging (LIDAR) technologies. The goal of gathering this data is to provide services such as real-time mapping and package delivery, and to make roadways safer.
Sharing data for better machine learning
Autonomous car platforms need plenty of learning before they’re ready to get on the road. Startups such as BigChainDB aim to use blockchain to create and manage property rights for vehicle data, so it can be shared across automakers’ AI learning systems. By speeding the pace of machine learning, driverless technology will travel far.
Electric cars & trucks on the blockchain
As electric vehicles and hybrids become more common, they’ll benefit from a new blockchain-fueled ecosystem for machine-to-machine (M2M) transactions. Beyond the toll-collecting applications already mentioned, electric cars will also benefit from blockchain technologies used to connect with energy providers and charging stations.
As an example, innogy a German utility company, has already launched a “digital twin” platform that can serve for parts authentication in the automotive and transportation logistic industries. The same company has also launched Share&Charge, a blockchain-enabled e-mobility payment platform that accepts payment in either crypto or fiat.
Ride sharing is just the beginning for blockchain-enabled resource sharing
Secure information sharing isn’t the only benefit of using blockchain. Ride haring services such as Uber and Lyft are reinventing the ways people use vehicles. As blockchain apps become easier to integrate across the entire tech landscape, neighborhood carpooling apps will continue to spread downward to the granular level.
Eventually, enterprise apps will schedule in-house ride sharing together with other existing resource-sharing apps. Likewise, fractional vehicle ownership and sharing are now possible.
In 2017 the consulting company Ernst & Young (EY) launched Tesseract, a blockchain-based platform to facilitate ride sharing as well as fractional vehicle ownership. Of course payments can be settled automatically in crypto or fiat. Outside developers will find profitable opportunities in creating apps to interface between vehicle owners and riders.
Auto parts authentication & logistics
The marketplace for replacement auto parts is huge, and it’s traditionally been a haven for shady dealers of counterfeit, stolen or junkyard parts. Sometimes parts are sourced illegally from “chop shops” that prey on stolen autos. But most often the problems come from sketchy foreign-made lookalikes for commonly-replaced OEM parts.
Counterfeits usually look good on the surface and may even include serial numbers. However, customers are quick to blame legitimate dealers for poor quality. As a result, manufacturers and authorized dealers have been searching for better ways to authenticate original parts as genuine.
They’re working together on blockchain-based technologies to detect and prevent fraud throughout the supply chain. Far beyond the functionality of holograms and geolocation apps, blockchain can now give each individual part its own unique ID for tracking throughout the manufacturing, storage, delivery and installation processes. They can also monitor parts’ lifelong performance until signaling replacement.
Most important for automakers and dealers, these anti-fraud apps can also facilitate – or prevent – interaction between a vehicle’s parts. In the near future a vehicle’s already-installed OEM parts will recognize bogus aftermarket replacements, and refuse to work with them. The vehicle will also call its owner or dealer to “snitch” on incoming counterfeit parts.
Overall customer service will benefit from these same blockchain technologies, since the parts can alert owners and service centers about maintenance needs, including vehicle recalls and service updates. Developers and investors can find opportunities to profit from apps that reconcile interoperability among different families of parts, or notify owners of pending maintenance needs.
Auto sales & service on the blockchain
Like other manufacturers, auto and parts makers have complex supply chains that can benefit from blockchain applications. Carmakers typically wait a few weeks – or even months – before receiving payments, due to long delays in shipping overseas with multiple links in the chain. Small delays in transmitting import-export documents can add up into costly delays for manufacturers, who pass those expenses onward to customers.
Blockchain-based tracking and shipping functionality can be combined with accounting features to speed the entire cycle. The goals are to improve just-in-time logistics, reduce custom-ordering time, and improve inventory turnaround times.
Tracking pre-sale vehicles
Blockchain apps can be used to track new or used vehicles before and after sale. Manufacturers constantly complain about dishonest dealers who “pre-sell” new vehicles without documentation.
Dirty dealers often sell a showroom vehicle but don’t immediately report it to the bank or manufacturer. That way they get a “free cash loan” for the rest of the month.
Since automakers, banks and parts suppliers sell to dealers on credit, they want payment as soon as possible. If the car is involved in an accident, the lender may be stuck with a big loss, and the auto dealer’s insurance may be affected.
Because that car was legally sold to a dealer, the lender’s only recourse is to terminate the dealer’s financing program. Manufacturers and banks are counting on blockchain apps to catch these trickster dealers.
Blockchain rap sheets for used cars
Beyond monitoring new cars and replacement parts, blockchain technologies can also help companies and used-car dealers reduce similar problems with costly unauthorized “company cars.” Blockchain offers instant transparency to vehicle and driving data, and several projects have been launched that bring together security, maintenance and finance functions.
Some new consumer-facing platforms are designed to solve the age-old problem of buying a used car. CarVertical provides a “VIN decoder” service that records and verifies vehicle history, including ownership, maintenance, for used-car buyers. Similar apps could also help consumers know whether their vehicle is actually receiving the parts and services they’ve paid for. In the near future, owners may be alerted when shady mechanics install counterfeit or junkyard parts instead of new ones.
Crypto-driven auto finance, leasing & insurance
Lenders and insurance companies can now use blockchain-based apps to monitor driving behavior and vehicle service history. In the same ways that geolocation systems helped reduce auto thefts and hijackings of parts shipments a few years ago, new shared-ledger technologies can report malfunctioning parts and schedule service appointments.
Consumers, banks and insurers all benefit from sharing secure data from cars and trucks on the roadway. For example, the tread-wear indicators on tires are helpful, but blockchain-powered sensors and alarms will be better. New apps also provide transparency about vehicle wear and tear, so manufacturers and insurers will have early warning of defective parts and potential recalls.
Most important, new auto finance apps are combining those security and maintenance features to make quick, accurate assessments of buyer creditworthiness and vehicle suitability.
For example, BMW has teamed with startup Bloom to offer a blockchain-enabled lending app. Insiders say that the secure mobile app lets users guard their personal data while applying for credit. The same platform also handles data warehousing, payments and customer service data.
Similarly, but on a smaller scale, Indian parts OEM Mahindra has launched a blockchain-based financing app for use in local marketplaces.
Volkswagen and IOTA have shown a proof-of-concept for autonomous vehicles that will be launched in 2019. Although not based on a blockchain, this shared-ledger technology relies on IOTA’s Internet of Things platform, called Tangle. The app is called Digital CarPass, which is distinct from several other projects that share the “carpass” name.
It’s designed to track vehicles throughout their entire working life by using blockchain-powered telematics. The platform monitors, records and analyzes how and where vehicle has been driven, as well as the operating conditions in the engine and other critical parts.
Artificial intelligence (AI) algorithms assess the car’s history and current condition on-the-fly and can provide feedback in real time. Yet, the platform also works to accurately predict resale value as well as the estimated time remaining in a vehicle’s working life. If applied more broadly such platforms can also offer better tracking for environmental issues, such as monitoring anti-pollution equipment.
BMW has teamed with startup Bloom to offer a blockchain-enabled lending app. Insiders say that the secure mobile app lets users guard their personal data while applying for credit. The same platform also handles data warehousing, payments and customer service data.
Porsche is also drawing praise as an early leader in auto blockchain development. Working with German startup XAIN they’re now testing blockchain-enabled vehicle features such as locking and unlocking cars, and autonomous driving.
General Motors is a leader in auto blockchain development
GM has recently filed several applications for blockchain patents regarding managing the data from autonomous vehicles. One of the most interesting applications envisions multiple driverless vehicles being used with coordination and communication among them, and it also notes that the same technologies can be applied to ordinary GM vehicle models, too.
The automaker plans to use blockchain systems to provide secure data exchange between automated vehicle fleets and government entities like municipalities and transportation departments. GM’s patent application mentions functionality like route navigation, fueling and recharging, license and permit validation, tolls, parking, carwashing and other services.
The auto giant’s patent filings further suggest the idea of using cloud-based blockchain technology to monitor driver behavior and communicate safety data, weather reports and traffic alerts. If you’re a blockchain app developer there should be plenty of opportunities to market your consumer-facing apps for third-party service providers.
As a member of the MOBI group, Renault recently launched a pilot program for car maintenance, using a shared ledger that logs the vehicle’s repair and maintenance history. Their next program is planned to focus on using on-board IoT for small financial transactions such as toll payments.
Developers are focused on building blockchain apps for couriers, parking lots and curbside meters, fast-food drive-throughs, and anywhere else that needs instant, touchless verification. For example, Oaken Innovations is working on a blockchain-powered toll platform.
The planned deployment involves Tesla vehicles and toll booths which are both equipped with Ethereum nodes. Smart contracts trigger the machine-to-machine (M2M) payments automatically when vehicles pass through toll stations.
It’s morning rush hour in automotive blockchain world
Many tech players and automotive-transportation companies are working together or in parallel with the MOBI initiative. After launching some of the projects mentioned in this article, the next milestone for the automotive industry will be blockchain-based vehicle insurance, financing and title verification, as well as apps for remote monitoring, mapping, and other driver-friendly applications.
Even though car lovers won’t see obvious signs of most improvements, investors and developers will find plenty of attractive opportunities in e-mobility apps to fill aftermarket needs in the fast-growing automotive-transportation ecosystem.
The sense among app developers is that it’s still very early in the game. By following the leaders who launch comprehensive projects there will be plenty of room for third-party developers and entrepreneurs to participate.