How web3 & blockchain technology can revolutionize the automotive industry
With the recent downturn in the crypto market, particularly NFT trade volume, every naysayer has climbed out of the woodwork to collectively yell “we told you they were just JPEGs!” Not withstanding the fact that their traditional shares took an equally damning nosedive, apparently it was only crypto that was a useless ponzi-scheme with no real world application — or so “they” say.
This isn’t a technology or a finance issue, it’s actually a PR problem. Other than news stories about Apes and rug pulls, the mainstream media doesn’t really cover the utility that blockchain technology can provide. “What does Bitcoin really do?” is a common argument made to discredit the whole of crypto, not realizing that in the grand scheme of things Bitcoin is just one small part (and use-case in and of itself) and not the whole.
To answer the “they’re just JPEGs” misconception, I’ve been trying to point out real world applications in a lot of real world discussions I’ve been having as of late. One particular industry that came up yesterday, that I think is a perfect example of being ready for the web3 evolution, is the automotive industry. One that I am a little familiar with having previously worked as an automotive strategist.
The automotive industry is one of the most stable yet at the same time innovative industries in the world, worth USD$3.8trillion dollars in 2022, absolutely dwarfing the whole of cryptocurrency which has a market cap of just USD$1.5billion. Yet it’s also one that has the most to gain by embracing web3, for its profits, for its production, and for its customers.
1. Logistics
One exciting blockchain currently streamlining the logistics industry is Baseledger (powered by the $Unibright cryptocurrency token). Founded in 2019 by EY, ConsenSys, and Microsoft, Baseledger is a public, council-governed blockchain using a Proof-Of-Stake consensus mechanism that enables a common frame of reference between disparate distributed systems. As their whitepaper says, “Baseline is a particularly promising way to reduce capital expenses and other overhead while increasing operational integrity when automating interorganizational business processes and data sharing” while focusing on privacy, permission, and performance.
What this means is that massive enterprise corporations that depend on smaller companies to supply, produce, or otherwise fulfil a part of their supply chain, can automate and automatically check these processes using smart contracts on the blockchain without having to directly share sensitive data amongst themselves. Privacy is protected and productivity is automated and streamlined.
Companies already using Baseledger and Unibright for their logistics solutions include Coca-Cola Bottling Supply Chain in North America, Lufthansa, and Deutsche Bahn Vertrieb.
An automotive manufacturer would benefit from employing Baseledger to track the production of its vehicles, given the amount of parts that need to be sourced from third-parties, and the amount of sub-processes and sub-production streams needed to complete one vehicle. All of these parts could then be tracked back through the blockchain to identify any potential fleet wide faults early and mitigate recall costs.
2. Ownership
A smart contract is just that, an automated contract that is automatically executed when certain rules or criteria are met. A Non-Fungible Token (yes, we’re going to talk about NFTs here, sans JPEGs) is a nonn-fungible smart contract; it can not be duplicated, faked, or transferred without certain criteria being met. This criteria can be anything from a value exchange (the traditional NFT sale), to a certain date or time lock, or anything in between (here’s a crazy idea, let’s move all global currency to the blockchain and agree to automatically burn it all if global temperature reaches a particular point — that’s a surefire way to solve global warming).
As such the ownership of any real world asset can also be locked into a smart contract. Meaning anyone that owns a particular NFT would own a particular vehicle tied to that NFT. This NFT could then be transferred to anyone else when sold, or loaned to a friend, or even leased on a time share basis.
What’s more, only the current holder of that NFT could be allowed to open the car door or start the vehicle. This NFT could be stored on a phone, or on a key type device (not dissimilar to a hardware ledger), and instantly transferred between people for temporary or permanent “ownership.”
This revolutionises not only asset ownership and resale, but also ride share and car share applications. An NFT subscription could give you access to any number of vehicles for a certain time, or give you ownership of just one vehicle for all time, or until you sold that NFT and access to someone else.
This potentially doesn’t need to even apply to the whole of the car. Already electric vehicle start up VinFast is planning to lower the initial cost of its cars by selling the whole car minus the battery, which will then be rented from the manufactured for the life of the vehicle and tracked via a blockchain. Taking this a step further, it’s not too much of a stretch of the imagination to see the problem of charging times solved by having easily replaceable batteries, doing away with the need to charge a battery, while also lowering the cost of purchasing the vehicle and reducing potential long term fault points (if the battery fails, swap it out). Pull up to a battery station, and swap the drained battery for a charged one, while “yours” is then charged ready for the next vehicle.
Alternatively imagine EV owners being rewarded by EV manufactures with tokens or coins every time they put renewable energy back into the grid, tracked on blockchain technology and giving owners the ability to use these tokens against future purchases, while offsetting the company’s overall carbon footprint by assigning these credits against the brand of vehicle the driver owns.
From a sales point of view, and a simple application of what NFT holders will recognize as “minting”, VinFast is currently using the blockchain to reserve and verify purchase orders. In a post-Covid mid-war supply chain strained world that currently has a two year wait for BMW’s new iX (I know, I tried to get one), that’s already pretty cool.
3. Data
At the very core of its application, the blockchain and ledgers are an automated and verifiable store of data. Instantly the most obvious and perhaps useful application of this technology is the collection and storage of vehicle usage data and history.
The ability to easily verify a vehicle’s service history and any damage or faults is a utility that would instantly benefit the second hand market and limit the impact of automotive resale fraud.
Usage data will allow engineers, investors, and other stakeholders to accurately and openly track the performance, longevity, and any issues of a particular vehicle, leading to transparent and open-source data that will turbocharge innovation while increasing safety and affordability.
4. What’s wrong with JPEGs, anyway?
Damn it, who said utility can’t be fun? As part of your vehicle’s ownership or lease NFT, why can’t you have a great digital asset included? An exact copy of your vehicle, or a stylised version, that your kids (let’s be honest, you) can then drive around in Fortnite or race in Forza?
Why can’t the loyalty tokens you’ve earned by driving your vehicle be exchanged for cool collectibles?
Why can’t these tokens be used as part of a DAO, a blockchain based governance token, allowing owners to vote on future designs or available colors or nameplates?
This type of community fun and engagement leads to brand loyalty and recognition and this type of activation will become an absolute staple of brand marketing in the world of web3.
The blockchain is a verifiable store of information, and smart contracts are programs that can execute certain actions, or are executed when certain criteria is met. That’s it. When understanding that, one can quickly begin to see how it can be used to not only improve existing processes, but to also make new applications possible.
The important thing to remember is that web3 isn’t meant to replace current industry, but to augment and evolve it. Its real power lies with the authentication and enhancement of existing processes, and it will continue to grow with the industries that it in turn empowers to innovate in a symbiotic relationship, because ultimately, web3 is about verifiable collaboration between corporations, companies, and most importantly, with customers.
