How crypto and blockchain are disrupting the automotive industry

Industry

While most industries are changing dramatically thanks to digitalisation, the automotive sector is also being shaken up by other big technology and business changes. Electric vehicles, self-driving cars, connected vehicles and car sharing – not to mention changing demographic trends and environmental pressures – all bring new challenges that promise to radically and quickly reshape the industry. And blockchain could have a key role to play in this future automotive industry.

“The automotive market of the future will be starkly different from that of today,” Deloitte notes in its report on “Accelerating technology disruption in the automotive market”. “It will need to be more integrated and offer on-demand and personalised services that will include autonomous, shared and connected cars. Blockchain has the potential to play a major role in underpinning the industry transformation that is coming.”

In another report, “Industrialising the blockchain for automotive”, the consultancy EY notes that blockchain systems could provide a solution to three automotive challenges in particular:

1. Increasing scalability of shared fleets by allowing fractional ownership and external investment
2. “Disaggregating” electric vehicles into core components (e.g., chassis, battery and onboard systems) and managing the value chain and economics of those separately
3. Allowing many different mobility providers to combine their offerings into a “mobility-as-a-service” offering, enabling seamless travel across cities

Despite its potential, blockchain technology needs more exploration, testing and investment before it’s likely to produce substantial and consistent benefits for the automotive sector, researchers Paula Fraga-Lamas and Tiago M Fernández-Caramés write in a recent IEEE paper. It also needs to overcome a number of roadblocks, including technical complexity, interoperability issues, infrastructure and architecture issues, standardisation issues, regulatory/legal hurdles and challenges related to technical skills and business strategies, they add.

“Automotive companies will have to experiment with different blockchain projects in order to discover where the ROI/value resides or can be created (e.g., if there will be additional sources of revenues or profits, disruptive added-value services, cost savings, stronger brand image, cyber resilience, fraud reduction, improvements in customers’ user experience),” they write. “Nevertheless, in some scenarios the payoff may require that companies wait until blockchain solutions be more robust, scalable, interoperable or demand less custom development (i.e., long-term investment).”

These concerns notwithstanding, quite a few blockchain tests, pilots and projects are already under way in the automotive industry:

  • In the first phase of its three-year MOBI Grand Challenge, the Mobility Open Blockchain Initiative (MOBI) announced its first winners in February, with the top prize going to Chorus Mobility, a New York-based startup working on “blockchain solutions for the future of transportation”. Chorus Mobility’s peer-to-peer payments protocols and decentralised applications are aimed at helping self-driving vehicles make the best use of city routes and infrastructure, and to “allocate rights of way based on demand and availability”. MOBI named Oaken Innovations as first runner-up for a blockchain-based system allowing vehicles and passengers to pay for road use and other infrastructure costs on demand. The competition saw a third-place tie between the Fraunhofer Blockchain Lab’s platooning system for more efficient autonomous driving and NuCypher/NICS Labs’ blockchain technology for sharing vehicles’ onboard diagnostics data.
  • In 2017, EY launched Tesseract, a blockchain-powered platform “supporting new mobility businesses built around fractional ownership of vehicles, multimodal transportation integration and new investment models”. The platform, EY says, can also support vehicle electrification through payments and pooled leases for batteries, as well as mobility-as-a-service features like asset tokens.
  • The Automotive eXchange Platform (AXP) recently chose the Fusion Foundation’s blockchain system for consolidating data in the pre-owned vehicle market. Fusion will begin by digitising AXP’s database of 10.5 million vehicles. “We chose to build our solution using the Fusion protocol due to its unique integration and interoperability features that can deliver the data consistency, security and transparency that are sorely needed today in the pre-owned auto industry,” AXP CEO Max Kane said in a press announcement.
  • In January, the Ford Motor Company and several partners announced the launch of a blockchain pilot aimed at ensuring the ethical sourcing of minerals in the global supply chain. Starting with a focus on the mineral cobalt, the pilot – expected to be completed by mid-2019 – will use a simulated sourcing scenario to follow the mineral from a Huayou Cobalt mine in the Democratic Republic of Congo all the way to an LG Chem plant in South Korea and a Ford plant in the US.
  • Late last year, Trillium Secure, a California-based blockchain startup, won a CES 2019 Innovation Award for its Trusted Mobility Platform and Services, designed to provide security and data integrity in the vehicle data marketplace. “Our platform and trusted data services address the $1.5tn question of how to unify mobility-as-a-service providers, technologies like artificial intelligence, and the necessary qualities of security and data integrity, towards the cause of transforming transportation as we know it,” Trillium Secure CEO and founder David Uze said in a press announcement.
  • The BMW Group hosted a MOBI meeting in Munich in February to “promote and develop common standards for applying blockchain and distributed ledger technologies (DLT) in the mobility industry”. In 2018, the company also ran a proof-of-concept of its blockchain-based VerifyCar app for tracking vehicle mileage. “Blockchains enable us to improve cross-organisational and cross-industry collaboration by increasing efficiency and transparency,” BMW Group’s Andrew Luckow said in a company article about the MOBI gathering.
  • Germany’s Infineon and Xain recently launched a joint effort to develop blockchain technology for vehicle microcontrollers. “We aim to turn cars into fully-fledged network participants,” Xain founder and CEO Leif-Nissen Lundbæk wrote in a Xain Medium post. “As well as being important for offline and real-time capabilities, this also enables a particularly high level of privacy protection in connection with AI technologies. It ensures that private data for machine learning is kept exclusively in local storage.”
  • Another Germany company, ZF Friedrichshafen AG, is working on a blockchain-based Car eWallet designed to provide end-to-end integration of mobility services, vehicles and infrastructure, “enabling cars to become autonomous business entities that can pay in real time for services like parking and charging”.

Overall spending on supply chain-related blockchain technologies in the automotive industry is expected to reach $131m in 2019, according to a recent report from Visiongain, a London-based media and analysis company.

“The blockchain supply chain technologies within the automotive market has been dominated by the US, accounting for over one-third of the global market,” Visiongain said in its press release for the report. “However, we expect the European and Latin American regions to expand more rapidly, where growth rates perform above the global trend. Moreover, there will be strong growth of blockchain supply chain technologies within the automotive market in automotive, finance and maintenance applications. The amount of electric and hybrid vehicles manufactured has increased considerably in recent years and this has led to higher usage of blockchain supply chain technologies within the automotive market in fuel cells sectors. Furthermore, the increasing demand from insurance and leasing application [has] contributed to the growth of the blockchain supply chain technologies within the automotive market.”

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