Benefits of Blockchain in the Automotive Industry

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Blockchain- the disruptive technology that is transforming businesses in all sectors has eventually come to the automotive industry. Around the globe, there is a remarkable increase in activity to leverage the benefits of blockchain in the automotive industry as companies are exploring ways to integrate blockchain technology into their operations. From tracking and verifying automotive parts to streamlining the vehicles supply chain, blockchain could become an essential technology across the automotive industry.

One key element of blockchain is its potential to create a decentralized database to capture and store data. That means data such as vehicle registration, car insurance records and registry data for identity, can be stored in a secure and incorruptible manner.

Streamlining automotive maintenance and supply chain

Tracking vehicle maintenance and sale history is a time-consuming process. The vehicle has to go through a rigorous verification process as the car is checked against several third-party databases for insurance, stolen, vehicle conditions, finance, parts and so on.  But, with blockchain, this process can be simplified.

Because a blockchain-based system provides easily verifiable information in real-time, the possibility of having two systems giving conflicting information is eradicated. Greater transparency would be achieved and the time needed to reconcile errors or data discrepancies would be eliminated or minimized. As a result, auto dealers, parts manufacturers, car repairs and customers would have access to more transparent information about the history of their vehicle.

Notably, French automaker Renault is working on a blockchain solution that will act as a ledger for all car maintenance and ownership history in a single location.

Verifying and tracking parts

One of the major problems car manufacturers face is the infiltration of fake or inferior parts in the automotive market. When these fake spare parts quickly fail after being installed in cars, the reputation of the auto dealer or car maker is greatly damaged.  Blockchain technology has the potential to streamline vehicle parts supply chain by providing transparency on the origin and integrity of the parts being delivered from the original equipment manufacturer (OEM) to the automaker.

A blockchain-based system could be used to create and record a unique code for each and every part along with immutable timestamps from the moment the spare part is manufactured.

That data, which is impossible to erase or change, can be made available to the buyer of the vehicle to verify which parts have been replaced and to the service centers of car dealerships to check when a part has reached its usage limit. Such a system would ensure authenticity, preventing the use of counterfeit parts for repairs and improving driver’s safety.

Consequently, all aspects of the vehicle lifetime including a complete geo-location history and parts recall information would be captured and stored in a decentralized database for the vehicle’s history.

Reducing risks of hacking on autonomous cars

Gartner Inc  projected that 250 million self-driving cars will be on the streets by 2020. That means, one in five cars worldwide will have automated driving capabilities and some form of wireless network connection by 2020. However, many cybersecurity experts and news resources have forecasted that autonomous cars could be subjected to fleet-wide hack.

Luckily, blockchain distributed ledger technology could greatly reduce the risks of hacking attacks on smart cars. Rather than have all connected vehicles report back to a centralized server, blockchain data is distributed amongst all participants of the network.

A blockchain database is virtually impossible to corrupt or hack, and each participant has equal control over the data. Access to the data can be granted to others by each participant using key encryption codes. And information in the blockchain system can be updatedonly when all participants validate the transaction to reach consensus.

Another key area where blockchain can be applied is for the use case of shared ownership of vehicles. For example, a blockchain-based digital identity system that profiles data of temporary users or partial owners of cars can be used to instantly calculate the costs of using a particular car with regard to each individual’s insurance rates and preferences as well as mileage.

A distinct example of the automotive industry embracing blockchain technology was the launch of The Mobility Open Blockchain Initiative (MOBI). The consortium, which includes world leading car makers such as Ford, BMW, Bosch, GM and Renault, is exploring ways to integrate blockchain into travel solutions in order to make transportation safer, more affordable, and more widely accessible.

In addition to joining MOBI, Ford is pursuing blockchain initiatives on its own as the company obtained a patent to develop a blockchain-based car-to-car communication system to reduce traffic.  Porsche also recently completed a blockchain pilot with German startup, XAIN, to build a mobile app that allows users to remotely interact with their vehicle.

As we have just seen, there are obvious benefits of blockchain in the automotive industry. This is just the beginning of deploying blockchain technology in this sector. With so many opportunities for blockchain to improve business processes and reduce operational challenges, automotive companies as well as consumers could certainly benefit from the mainstream adoption of blockchain.

 

Ray Battrick is a certified blockchain expert and FinTech copywriter who is devoted to working for you to build blockchain-based applications for your business. Ray is also a FinTech copywriter who is skilled at creating persuasive content for a wide range of products, including financial technology, business blockchain, investing and more. As an avid blockchain enthusiast, Ray enjoys writing about business blockchain, ICOs and cryptocurrency investment.

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