Blockchain and the Automotive Industry

Since its inception over 130 years ago, with the patent filing by Karl Benz, the Automobile and its surrounding industry have experienced continued technological advancement. Often the advancement was as a result of an invention or production tweak that came from within the industry, but since the introduction of computer components to vehicles in the 1970s, the hardware and software ushered in a new era and shaped the history of the Automobile. With the introduction and commercialization of blockchain technology, we are yet again standing on the doorstep of a new era. This era will completely redefine the industry from production, to how they are acquired, to how we interact with them.

From a production standpoint, while there is a push for electrification and self-driving/autonomous vehicles, before mass adoption is able to scale effectively, networks inside and outside the vehicle must experience innovation. Recent experiments have shown the ability to hack a conventional CAN communication system (present in most vehicles on the road today) and take over control. While this is a relatively new, and at this point an isolated problem it could become a greater threat with the introduction of the ‘connected car’, where an increasing amount of data is sent and received to the manufacturers and 3rd party vendors. These new connected cars have obvious security threats and blockchain could provide the solution, but it could also solve problems that have long plagued the industry. Since essentially the first vehicles took to the roads, vehicle theft and odometer rollback for resale has been a cat and mouse game between the manufacturers and those looking to profit from these types of schemes . There are certainly already companies looking to seize the opportunity and solve these problems, such as Xain, who working with Porsche, Daimler and Volkswagen at creating an end-to-end blockchain based vehicle system and network. By introducing these new blockchain solutions, the Automotive industry will be able to provide greater security for the property owner, the vehicles data, the network it’s connected to and any services that spawns from it will benefit from increased security.

From an acquisition standpoint, while the conventional North American dealer model may remain engrained in the industry, due to laws and regulations protecting franchised, non-manufacturer ownership, the customer demographic and purchasing behaviour may greatly vary. With a greater focus on environmental stability, increased urban living, and improved public transportation, the need for personal ownership of a vehicle is lessening. While the need is lessening, technology and services currently available do not provide a similar level of convenience vs cost analysis as traditional ownership. While the trend of less personal ownership has been encouraged by rider services like Uber and Lyft, as well as car sharing like Zip Car, it has yet to take hold in the mainstream economy. With the introduction of blockchain and creation of smart vehicle networks, companies like VLB or DOVU hope to create a simpler, easier way for people to share the convenience, costs, and information associated with many people owning and interacting with a single vehicle. Combine these factors with self-driving/autonomous cars and in the future, efficiencies of a decentralized AI based vehicle network could almost eliminate sole personal ownership. An example of eliminating sole ownership currently trying to be implemented would be BitCar, which is focusing on the niche Exotic vehicle market and would be best compared to LookLateral of the Art world.

Based on the two previous factors of production and acquisition being redefined in this new era, it’s no surprise it will also affect how we, the user, will interact with the new era automobiles on a day to day basis. By introducing blockchain smart contract security systems, tokenized vehicle sharing, self-driving/autonomous and electric vehicles to a connected AI-based network, the opportunities become endless. Before reaching the this new era though, foundations of the network will need to be laid. Changes or items that may seem small in the grand scheme of things, such as vehicle registration, are pertinent to be in place before moving forward. How is a smart network going to work off old paper titles and centralized, fragmented databases? This is a problem CarVertical is looking to solve, by marrying blockchain with vehicle registration. By doing so, the ownership of a physical asset is transferred to the digital network. Once digitized the title can then be bought, sold and traded through a smart contract whether from individual to individual, dealer to individual, lease company to company, etc. No longer will banks be worried that car dealers have received money, but not funded a deal. No longer will individuals be worried about meeting up and exchanging funds for keys and a title. It will all be done on the chain….but which chains?

Make sure you follow @automotive to stay tuned! We’ll be looking at how the two worlds of Automotive and Blockchain collide!