Ever thought about blockchain while driving your car?

The ecosystem of the automotive industry is a complex one and involves a range of processes with the likes of design, marketing, sales, finance, post-sale service and much more. This article will talk about what blockchain can do to make this ecosystem function like a well-oiled machine in a 10x better fashion.

Blockchain is starting to have applications in improving process efficiencies in vehicle management, verification processes across supply chains and even in finance & insurance by helping to streamline transaction processes. In the age of autonomous cars where millions of devices are communicating with each other, there is a need for these interactions to be recorded in an immutable database with restrictions to access.

“Hundreds of billions of miles of human driving data may be needed to develop safe and reliable autonomous vehicles,” said Chris Ballinger, director of mobility services and chief financial officer at Toyota Research Institute. “Blockchains and distributed ledgers may enable pooling data from vehicle owners, fleet managers, and manufacturers to shorten the time for reaching this goal, thereby bringing forward the safety, efficiency and convenience benefits of autonomous driving technology.”

Let’s dig deeper to find out how practical will blockchain be as a catalyst to transform the industry.

Verification of parts

Blockchain can be used to record, store and update information on vehicle parts including spare parts. It will essentially allow the customer, car manufacture and service center to track parts throughout the supply chain. Automotive parts provenance and tracking could be done by assigning a unique ID for every part at the time of creation and recorded with immutable timestamps. This data can be used by the owner of the vehicle to verify which parts have been replaced, to the manufacturer to execute recalls efficiently, or to the service center to know when a part has reached its limit.

The French automaker, Renault is piloting a digital car maintenance book. They are leveraging blockchain technology to gather all information maintained by automakers, insurers and service providers in one place in an open architecture accessible by the customer. For example, this could allow a seller to make all the historical information about the car available to the buyer by simply giving them access to the digital car maintenance book.

Integrated supply chain

Blockchain could provide an end to end supply chain solution by enabling automotive organisations to order or sell, track and pay for orders once they arrive at their destination. Documentation related to the transaction could be created, updated and verified by stakeholders on the blockchain. Payments could be processed with ease between parties involved in the supply chain based upon agreements for example agreements between seller and buyer, seller and shipping company and so on. Moreover, with vehicles essentially becoming IoT devices, connected IoT sensors and smart devices could measure the condition of goods and other information that can be recorded on the blockchain and make changes accordingly to final settlements. For example in the case of damaged goods.

Deloitte’s supply chain project, TraceChain enables tracking and tracing of finished goods and materials. Digital identities are created on the blockchain for all physical goods as well as suppliers, manufacturers, distributors and so on. The immutable nature of the blockchain allows recording the chain of custody for every item that is logged on the blockchain form its origin to the point of sale. They intend to provide immutable near real-time information to reduce counterfeits and increase trust among all stakeholders.

Incentive programs

Blockchain could be used to record all dealer and customer purchases and create a loyalty points program where points can be redeemed and used as currency with the Orginal equipment manufacturers(OEM’s) loyalty network. For example, the dealer would be able to use the customer redeemed loyalty points to pay for parts at a discount.

Loyyal is a loyalty and rewards platform that uses blockchain and smart contracts to enable instant redemption of loyalty points. By leveraging blockchain, they can remove delays, added costs and poor integration with other systems.

Insurance contracts

Blockchain could enable insurance firms to create personalised insurance contracts based on driving behavior and automate payments and settlements following an insurance claim. Information specific to driving such as speeding, collision and damaged parts could be stored on a blockchain, shared and used to calculate insurance premiums. As the record is linked to the owner, history of the vehicle owner would remain available to the insurance company even after the vehicle is sold.

Kasko2go is a car insurance mobile application that uses blockchain to makes its insurance faster, safer and ultimately fairer. By filing each claim on the blockchain, they reduce fraud by making double-claiming impossible. They use K2G utility tokens within the ecosystem to reduce transaction costs and help in offering lower prices. By using smart contracts, they ensure trustworthy contract conditions and purchase protection.

Ride-sharing services

As we have mentioned in our previous article on ride-sharing, blockchain has the potential to disrupt industry giants like Uber and Lyft. It can be used to record and execute transactions to enable the vehicle owners to monetise trips. This would connect all parties involved in ridesharing and allow the exchange of data securely. This data could include vehicle location, keys to unlock the car, terms and payments information.

Check out our recent article Need a ride? Get it on blockchain to get an in-depth analysis into blockchain’s application in the ride-sharing industry.

The core properties of blockchain technology are suited to reduce business friction and increase trust among participants across the automotive supply chain. However, the potential impact, value, and complexity of blockchain would vary for each of the above-mentioned use cases as the automotive landscape changes due to factors such as new competition, compliance changes, and other disruptive factors.

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Envisioning a world without intermediaries.

Sabarish Nair

Blockchain Analyst