Blockchain to disrupt the auto business
Bitcoin may be the most famous example, but blockchain is a term that describes a whole range of decentralized technologies. As cars become more connected and data-driven, blockchain is moving beyond the scope of digital currency. The technology is on the verge of rewiring automotive business models.
Autonomous vehicles with artificial intelligence (AI), electric cars that can sell stored energy back into the grid, and shared mobility models have been on technology roadmaps somewhere up and off to the right for automotive product developers for some time. They still seem quite far off for most people, but blockchain is now enabling automakers to make progress. Early prototypes are already being built that are helping companies understand the how’s and why’s of blockchain implementation—and establishing new strategic partnerships.
Blockchain is essentially just a way of synchronizing data across a lot of locations or companies. Instead of holding the data centrally, blockchain spreads it across all the members of a network and updates it regularly. The blocks can represent data of many types, managing transactions involving currency, identity, or digital rights. This takes middlemen like banks out of the equation, making transactions, networking, and verification quick, secure, and cheap.
“The blockchain revolution started with cryptocurrency, and although every use case will eventually evolve into some kind of tokenized value exchange, the technology’s reach will be much broader,” says Kamal Ved, Director of Business Development at BigChainDB, a blockchain database provider that helps companies build their own scalable blockchain platforms and applications.
In the short term, Ved said the big benefits of blockchain technology will come from using a combination of telemetry, sensors, and blockchains to create a log of vehicle lifecycle data that is tamper-proof. BigChainDB is involved in multiple proof-of-concept projects right now, with a number putting car telemetry data on the blockchain.
The creation of a “digital twin” logbook is the most logical place for automakers to start. The idea may not be new, but it is relatively simple. The digital twin enables the automaker to tell where a vehicle has been, how it has performed, and how it was driven.
“Automakers could use vehicle lifecycle data from a blockchain to service vehicles more efficiently,” said Ved. “They could then also partner with insurance providers to provide more personalized products that benefit consumers and reduce claim costs. Odometer fraud could also be reduced with regulators able to enforce the law more fairly when incidents occur.”
Looking further ahead, blockchain could provide the secure networks needed to manage micropayments for a broad range of additional emobility services. In future vehicles, drivers could pay for parking, road tolls, and EV charging more conveniently using their vehicle’s eWallet.
In Europe, ZF, IBM, and Swiss financial services company UBS are jointly working on just such a concept. The companies plan to provide an ewallet for mobility service transactions using the Hyperledger Fabric 1.0 blockchain framework.
Once you put money into the digital ewallet, it can make contactless, automatic payments up to a preset limit. Embedding the capability for micropayments on the go in vehicles opens up a lot of new possibilities, claims ZF. If EVs have a way to pay for inductive charging when they stop at a red light, investments in a ‘charge-on-the-go’ infrastructure is suddenly a lot more viable for power suppliers.
And because the ewallet can also accept payments, you have a secure method for cars to collect payment if they sell stored energy back into power grids. For drivers who want to make their car available for car-sharing portals, the ewallet can collect fees directly from other users.
“We see blockchain as a technology that builds in trust,” said Dr. Alexander Graf, head of ZF’s IoT Lab. “We can see clear advantages for blockchain when it comes to trust issues or complex configuration management. It could cover any application that needs an audit trail.”
Other suppliers see opportunities for automakers in increased personalization of vehicles. With electric drivelines, there is more scope to sell dynamic features as apps.
“Blockchain could enable customers to personalize the calibrations for [vehicle] dynamics for individual drivers, enabling additional features like drift modes and performance boosting functions,” said Michael Schomisch, software manager at GKN Driveline. “The blockchain technology itself, like the quality and safety standards, will be defined by the OEMs to ensure that everything on board the vehicle is following the same protocol.”
Automotive business models have already started to change. Peer-to-peer sharing is starting to catch on. Automakers recognized the launch of Uber as a disruptive threat and have responded with car sharing services such as BMW’s DriveNow and Daimler’s Car2Go.
A similar disruption is underway with autonomous vehicles; tech giants want to use their expertise in monetizing huge datasets to disrupt the car business—and without producing their own vehicle fleets.
“Autonomous vehicles will depend on artificial intelligence achieving a margin of error close to 0%,” said Ved. “If the experts are right, this will require trillions of miles of driving data. Blockchain will provide the framework for competitors to come together in a ‘coopetition’ setting, pooling massive amounts of data to accelerate development, giving everybody involved with a complete provenance and a tokenized attribution of value.”
The question of data ownership will not be easy. It will take time to build a secure automotive blockchain database, but there’s a clear incentive for all involved to share data. Consumers want intelligent solutions that can adapt to their individual needs.
Ultimately that must lead to more “personalizable” car concepts, a more modular approach to mobility, and the provision of services that go beyond the vehicle itself. Technology that enables these digital services is essential. In the coming decade, bringing blockchain on board looks set to do for automotive what e-commerce has already done for retail.