A recent report from the IBM Institute for Business Value estimates that around 62 percent of the global automotive industry will use blockchain technologies as early as 2021. Many car manufacturers are currently investing in Distributed Ledgers Technologies (DLT) projects.
Many analysers and blockchain evangelists firmly believe that the automotive industry is currently being disrupted by blockchain technologies. In this article, we will present a panorama of this phenomenon.
Astonishingly, the blockchain has found its ‘natural’ role among other emerging technologies such as autonomous, ‘self-driving,’ and connected cars.
Domains Where Blockchain Disrupts the Automotive Industry
The Supply (Block) Chain
In a typical car manufacturing process, tens of thousands of parts are needed and are provided by a chain of subcontractors and specialized parts manufacturers. Many of these parts are crucial for the safety of the final product; therefore, they need to be tested using various quality assurance schemes. Of course, in such a system, competition between the contractors is harsh. One cannot rule out the risk of malicious processes where parts could be stolen, damaged, replaced, counterfeited, or simply where test reports and quality certificates could be faked. The complexity of the automotive supply chain is such that it is not easy to maintain ledgers and records in a secure and trusted way of all the various events which may occur.
By using DLT, the supply chain may turn into a supply blockchain and virtually eliminate the risks mentioned above. This also can be applied to spare parts, second-hand parts, and parts used for car-servicing processes.
Buying/selling a vehicle, either new or used, is not a straightforward process. Blockchain technologies can be used to assert the authenticity of a vehicle, reducing the risk that it may have been stolen, or that its records have been tampered with, for example, masking its history of repairs or damages. A token can build a global system where car history and payment are linked to each other.
Car Insurance and Third-Party Services
During the lifetime of a vehicle, there are third parties often involved. For example, insurance companies or car service maintenance. This is especially true for cars used for business purposes like transport buses, commercial trucks, taxis, or ride-sharing services.
Information that is related to a vehicle and needed by these third-party services can be accessed via a blockchain. This fits very well with on-demand mobility services (MaaS) cases.
Vehicles are now produced as IoT devices. They can communicate and cooperate with a wide range of other IoT devices: other IoT cars/vehicles, for instance, but, also:
- Geolocation services
- Autopilot services
- Motorway information systems (weather, traffic conditions, etc.)
- Unmanned service vehicles
- Charging stations
- Other traffic
- Repair robots
That interconnection can be regulated and secured through blockchain technology, mainly to prevent hackers from counterfeiting connected vehicles or compatible services). DLT can also establish digitally (or with the help of secure hardware, the ownership rights of a vehicle.
These are just several examples, and there are potentially many more disruptive applications of blockchain in the automotive industry! Here we provide some concrete examples of DLT projects currently operated by some car manufacturers.
DLT Projects Currently Operated by Car Manufacturers
Hyundai AutoEver & Blocko
Hyundai AutoEver, a subsidiary of the car manufacturer Hyundai Motor Group, in a partnership with Blocko, has formally announced the development of a hybrid blockchain for securing Hyundai vehicle ownership rights and offers an irrefragable history of events such as mileage, service history, and vehicle age, etc. Interestingly enough, the blockchain technological choice is the Aergo Mainnet platform.
BMW & Vechain
The famous German car brand, BMW, has partnered with the blockchain platform Vechain to develop the VerifyCar system designed to act as a digital passport for its vehicles. The carmaker announced it would use blockchain to prevent odometers and tachometers from being counterfeited as an alternative to the existing smartcard-based technologies. BMW is also a member of several blockchain associations.
Porsche & XAIN
Porsche has conducted a successful test with the XAIN platform to develop a blockchain that allows owners to securely allow other people to drive their Porsche vehicles. Some projects are also conducted with the Spanish BBVA bank to develop blockchain-based corporate loans for the acquisition of a Porsche vehicle.
Blockchain seems to be ‘smoothly’ integrating itself in a coherent way with other new disruptive technologies such as electric cars, connected cars, AI-based autonomous vehicles, and ride-sharing services.
This may represent a real earthquake in the automotive industry and could lead to a redistribution of the roles between the actors of such industries.
In all cases, HSMs will be needed, as they are the proven root of trust of permissioned or hybrid blockchain systems typically used for the automotive business.
References and Further Reading
- Learn more about Utimaco's HSMs for blockchains
Blog post by Martin Rupp, Priyank Kumar and Ulrich Scholten