How can blockchain benefit the car industry?

October 15, 2018
Chris Wheal

The transition to this ‘safer and cleaner’ motoring will be heavily reliant on technology and specifically blockchain. And the pace of change in the car industry is about to accelerate.

While you could never accuse the automotive industry of standing still, the next decade might see more change than ever before. The move to electric powered cars and ultimately driverless vehicles, look set to revolutionise road travel. We will see the widespread adoption of cars powered with no need for fossil fuels and an end to human mistakes at the wheel (not to mention drink driving).

In 2018 BMW recalled over 300,000 vehicles from the UK over safety concerns

Safety first

In recent years the car industry has suffered from high-profile vehicle recalls for either potentially dangerous defects (for instance BMW and Toyota in 2018 alone); or due to intentional manipulation such as Volkswagen emissions scandal.

Being able to trace and verify both the origin of parts and testing procedure is important and this is where blockchain and the automotive industry can be a perfect match.

Earlier this year, VW’s head of blockchain Benjamin Sinram gave a presentation where he talked about blockchain being used, in the event of accident or fault, to document and verify the current software version of the car.  By providing public proof of data integrity, this technology could go some way to rebuilding trust and assurances.

Fake parts

Safety on a vehicle often hinges on the quality of the parts fitted. If sub-standard, fake parts enter the supply chain and end up in dealer service centres, the impact is damaging not just in terms of driver danger but in reputational damage to the car maker.

In the past, car manufacturers have taken great efforts to prevent fake parts entering the supply chain; but it has often proved an uphill climb.

However, with blockchain it should be possible to track a part from its origin, to its delivery and fitting. Through blockchain, a unique ID for every part can be initiated and recorded, along with permanent timestamps from the time the part is made. Crypto-enabled tags that communicate directly to the blockchain can be embedded into the part as further proof of a parts authenticity.

Via blockchain, data can be supplied to a car owner verifying which parts have been replaced, also to the manufacturer to speedily execute recalls, and finally to the service centre to notify when a part is due for replacement.

Supply chain efficiency

But it is not just ‘authenticity’ and ‘wear and tear’ of auto parts that benefit from blockchain. The supply chain for parts can be made significantly more efficient too.

A car plant must synchronize effectively with a host of different suppliers. If the supply and distribution systems are inefficient, parts are not delivered on time and inventory levels suffer. A blockchain based system connected with IoT sensors and smart devices would ensure accurate and transparent data on part location, quantity and current status.

This traceability of parts makes planning of production schedules and managing of inventory levels much easier.

Outbound distribution also stands to gain from blockchain technology. Car makers need to work closely with rail, shipping, and trucking companies to ensure on-time timely delivery of new vehicles to importers and dealers around the world.

A blockchain based system providing a trusted end-to-end view of vehicle location and status could reduce incorrect orders and the number of lost or damaged vehicles. Importers and dealers should benefit from reduced lead times for vehicle orders – with customers the ultimate beneficiaries too.

Blockchain technology could provide assurances that mileage on the clock is accurate

What does the clock say?

When buying a used car there is often an element of doubt whether the miles on the clock are genuine.  The claim of 12,000 miles on the clock of a six-year-old car might sound too good to be true. And a well-worn steering wheel and gear stick might increase any scepticism. But to know absolute genuine mileage in every instance, car manufacturers such as VW are set to launch a service called Digital CarPass. Essentially, it is a report card for a vehicle that uses a distributed ledger to ensure data such as mileage is reliable.

As Bruce Pon, CEO of BigChainDB explains, the Carpass project aims to give consumers more power by providing a digital wallet to track a vehicle’s ‘life events.’

It integrates telematics data that tracks how and where a car has been driven. Is it primarily motorway miles or mountainous roads where the engine has been worked hard? Based on the car history, artificial intelligence algorithms can accurately predict the resale value of the car at any moment in time.

Blockchain could play a crucial role in the development of driverless cars

Driverless technology

Autonomous vehicles, or driverless cars as they are often called, may soon be common on our roads. It could mean the end of road rage, drink driving, speeding tickets, traffic jams and falling asleep at the wheel.

It could also mean a colossal reduction in accidents and subsequently insurance claims.  However, it is not plain sailing by any means. Research by Rand Corp and McKinsey suggests that to make autonomous vehicles safe, one trillion road miles would need to be driven to capture all the data (relating to multi-terrain/weather conditions etc) necessary.  Consider the fact that car manufacturers are not always known for their eagerness to share their research findings, and you see a potential hurdle.

Data sharing is seen as crucial to autonomous vehicle development. Once again blockchain could provide the answer.

According to Chris Ballinger, Toyota Research Institute’s director of mobility services, blockchains and distributed ledgers may enable pooling data from vehicle owners, fleet managers, and manufacturers to shorten the time for reaching the 1 trillion road miles goal. In terms of providing an incentive for data sharing, a tokenized data exchange could fit the bill.

Growing distributed database

We may be a long way from it yet, with manufacturers still reluctant to share all data, but for driverless technology to work most effectively it is blockchain that is the essential connector.

As members in the blockchain network grow, so courier companies, governments, taxi fleets, trucking companies – all with have huge fleets of vehicles that use the roads – can access a decentralized data exchange built on blockchain.

All participants will be able to transmit funds across blockchain ledgers, hassle-free. Vehicles could transact and pay for services be that parking, tolls, or vehicle charging/fuelling without any human involvement. It would all be paperless, transparent with payment transfers between user and provider automatic.

Over the next few decades the very macho ‘driving experience’ on which most cars are still sold is likely to disappear. While the ‘old school’ may still like the idea of being king of the road commanding their sporty steering wheel; the economic and safety factors aligned to autonomous vehicles is likely to prove more persuasive. Blockchain looks set to play a pivotal role.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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