Blockchain For Automotive: 12 Possible Use Cases

  • 6 November 2018
  • Sam Mire

On one hand, the automotive industry is the same it’s always been: manufacturers like GMC continue to sell $56,000 luxury pickup trucks while California leads the country for electric car sales, outpacing the next closest state by more than 250,000 units. On the other hand, the automotive industry is also showing signs of profound change. Vehicles are smarter than ever, with manufacturers embedding more sensors capable of everything from assessing post-crash injuries to tracking and disabling stolen vehicles. And we continue to move toward the age of autonomous vehicles. By 2025, approximately 8 million cars will be in transit while set to level 3 “conditional” automation or higher.

So while the industry faces the same old problems, like supply chain management and vehicle safety issues, new challenges continue to call for technological innovation and an evolution of industry standards.

The blockchain has clear application for providing greater oversight and accountability in automotive supply chains, and can also serve as a means by which drivers can view and understand how and their vehicle’s data is being shared and utilized. Unique sales models, such as Tesla’s deposit-dependent formula, will become more prevalent as autonomous prototypes and other innovative models hit the market. Smart contract technology could ensure that tangible milestones create more accountability in ensuring timely delivery of the product.  Tesla customers would have loved that.

Blockchain for Automotive - Practical use cases

Securing Smart Vehicle-Derived Data

Blockchain use cases in the automotive industry - Smart Vehicle-Derived Data

Smart vehicles are broaching the realm of autonomy, and this means they generate an unprecedented amount of data that must be stored, shared, and sold. A self-driving vehicle can generate as much as 1 gigabyte of data per second, and all of it will be put to use by somebody. It’s possible that by 2020, car manufacturers will make a greater profit selling vehicle-derived data than from selling the vehicles themselves.

McKinsey has predicted that the entire market for monetizing vehicle data could be worth as much as $750 billion by 2030. 32 of 44 car brands currently offer some form of vehicle-to-vehicle communication devices in their 2018 models, illustrating that data collection is already normal for the automotive industry. This trend is only going to accelerate. The most advanced vehicles have vehicle-to-vehicle transponders, GPS systems, inward and outward facing cameras, onboard processors, and beyond. According to Intel, just one autonomous vehicle will generate about 4,000 gigabytes of data per day. But while these changes are inevitable, leaving that data unsecured or only loosely secured can’t be acceptable.

Our vehicles are already collecting immense stores of data that will only grow larger. That data must be secured, and the blockchain is an ideal candidate for use as a storage and transfer system for vehicle-derived data. Additionally, utilizing blockchain technology may prove a way to allow users greater oversight into exactly who is accessing their data, and grant the user more leverage when it comes to consenting to how their data is used.

Companies Trying to Solve This Problem

  • Dovu & BMW Using blockchain to build vehicle data solutions.
  • Volkswagen & IOTA Using the IOTA Tangle to create data sharing systems for autonomous vehicles. 

IoT Integration for Regulatory and Environmental Purposes

Blockchain use cases in the automotive industry - Regulatory and Environmental Transparency

Cars, trucks, planes, and other shipping processes represent the greatest source of carbon dioxide emissions today. According to the American Lung Association, roughly 30,000 people die each year from health problems stemming from the ingestion of vehicle-created pollutants. We can combat these problems to an extent. California became the first state to enact mandated emissions standards in 1965, and federal legislation has followed in the form of nationwide emissions standards in 1968, the 1970 Clean Air Act, and the 1977 Clean Air Act Amendments.

For the cost of approximately $130 per car, at least 50 percent of all hydrocarbon, carbon dioxide, and nitrogen oxide emissions can be reduced through engine modifications. Automotive manufacturers have made significant progress in reducing vehicle emissions, and as older vehicles bite the dust, newer models will continue to do better. Being able to identify a vehicle’s emissions output to analyze how engine or behavior modifications can be made is one of the benefits of a growing dataset from smarter vehicles.

Drivers and brands that accept the potential of the IoT to track and report data related to emissions will find themselves with a greater awareness of how they can adopt more environmentally-friendly behaviors. This could be a significant pull factor for drivers who are serious about wanting to reduce the pollution emitted from their own vehicle, as well as for the brands that hold themselves to a similar standard while offering better tools for their customers to gain these insights. Using blockchain technology as an interoperable ledger for these sort of statistics could reduce the cost of implementing such metrics.

Companies Trying to Solve This Problem

Automating Maintenance

Blockchain use cases in the automotive industry - Automating Maintenance

It isn’t particularly expensive to maintain your vehicle if you know what you’re doing. An oil and filter change runs anywhere from $20–$100, a tire rotation is generally $20–$50, and a multipoint inspection won’t break the bank for most. But that’s only if you know how to maintain your car, assess warning lights, and so on. Continuing to drive a car that’s in need of a checkup is a recipe for larger, more expensive problems.

According to AAA, the most expensive vehicles cost $10,054 per year in upkeep costs, wear and tear, and so on. On average, this figure is closer to $8,469 per year when sedans (the least expensive vehicle for upkeep), SUVs (the most expensive), and electric cars are factored in. There’s reason to believe that the minutiae and unwelcome surprises that come with owning and leasing a vehicle wouldn’t be as frequent or costly if all of the data our vehicles produce were put to good use.

The blockchain’s interoperability promises to connect the many sub-sectors that constitute the automotive industry, enhancing convenience within each. Connecting mechanics to your car’s data from a remote location could save you time and money. Speeding tickets could be managed with a decentralized record containing all the driver’s information that an officer needs to register a fine for a traffic violation. There are several applications utilizing blockchain technology that will reduce the headaches associated with driving.

Companies Trying to Solve This Problem

  • Renault  Creating immutable car maintenance history with blockchain.

Rewarding Safe Driving Behaviors

Blockchain use cases in the automotive industry - Rewarding Safe Driving

There’s no denying the correlations between speed, recklessness, traffic accidents, and road deaths. When the speed limit on highways was reduced to 55 mph in 1974, there was a correlating 15 percent drop in traffic fatalities. When speed limits on rural interstate highways were increased in 1984, there was predictably a (predictable) 22 percent increase in traffic deaths. In states that increased the speed limit to 70 mph, there was a 35 percent rise in highway deaths. Between 2005 and 2014, speeding was the main factor in 112,580 traffic deaths, or 31 percent of all roadway fatalities.

But speeding is far from the only way to increase the risk of serious injury or death while driving, whether it’s your own or someone else’s. While drunk driving is shown to be decreasing, 29 percent of the total vehicle-related fatalities in 2017 were related to drunk driving. This isn’t limited to alcohol, however: 43 percent of motorists who die behind the wheel have drugs in their system. While marijuana skews this statistic a bit, the continued rise of opiate use makes the problem more serious. What isn’t on the rise, however, is responsible driving. Some have proposed a new incentive as an attempt to reverse that trend.

At least one major auto manufacturer has discovered a unique, blockchain-enabled way to incentivize safe driving practices since laws, large expenses, and losses life apparently haven’t done the trick. Information about a driver’s habits are transmitted to the manufacturer’s database, and that information is translated into a proprietary token, awarded to a driver’s account in amounts commensurate with the safety of their driving. These coins are then tallied to reward the safest drivers with tickets to different races or auto-centric events. The thinking is that such a system could become even more effective if safe drivers could simply receive cryptocurrencies, fiat currency, and/or lower their insurance premium.

Companies Trying to Solve This Problem

  • Daimler  Issued a €100 million ETH bond to test a tokenized clean driving reward system.
  • Kasko2Go Incentivizing good driving with lower insurance rates. 

In-Vehicle Wallets for Easier Roadway Purchases

Blockchain use cases in the automotive industry - In-Vehicle Wallets

Tolls are just one example of the inextricable link between commerce and commuting. As of 2015, 35 states had at least one tolled highway, and in 2013, $13 billion was collected by those toll agencies. With 5.7 billion trips taken on toll roads per year, and many of them being daily, repetitious commutes, it’s no surprise that certain states lean heavily on their toll roads as a source of revenue. Florida, a leading tourist state, is the leader in total toll roads. They had 719 in 2016, and were expecting to add even more. In some places — we’re looking at you, D.C. — tolls can be as high as $40.

All of these tolls are a tax not just financially, but in terms of convenience. Tolls aren’t the only instance where driving a vehicle will cost you money. It costs $10 per vehicle to enter California’s state parks. If you are bringing a large crowd on a bus, that fee rises to $60. While most states have some form of in-car express pass for tolls, that vision can be even broader, extended to the likes of state parks, parking fees, meter payments, and beyond. The concept of an in-car wallet for quicker transactions is no fantasy. At least one manufacturer has given the concept a test drive with promising results.

Companies Trying to Solve This Problem

Manufacturing Transparency

Blockchain use cases in the automotive industry - Manufacturing Transparency

The automotive supply chain is more dispersed than many realize. “Made in America” typically doesn’t really mean “Made in America.” It’s noteworthy that the closest thing you will find to an “all-American” vehicle ranking is the Most American Made” vehicle ranking. All it takes to qualify for such a list is 75 percent of a car’s parts being manufactured in the States. Needless to say, most vehicles don’t qualify, and most don’t rise very high above it, either.

Even some of the most recognizable models from American manufacturers have surprisingly low domestic production rates. Only 65 percent of the parts in the 2014 Taurus were made in either America or Canada, while the Ford Explorer that year was only 60 percent American or Canadian made. Under NAFTA, Mexico’s share of North American vehicle manufacturing has risen to 20 percent, and is expected to further rise to 26 percent  by 2020. This isn’t a bad thing. It just means that supply chains, even for domestic brands, remain spread out.

As is the case with any supply chain, blockchain ledgers allow for better oversight and cooperation between members of a chain, increasing efficiency and the ability to nail down the source of a flawed shipment of mufflers or a fixable choke point in the supply line.

Companies Trying to Solve This Problem

  • MOBI – Blockchain non-profit creating transparency solutions for automotive industry. 

Smart Contracts for Leasing / Financing

Blockchain use cases in the automotive industry - Smart Contracts for Leasing - Financing

As of the end of 2017, there were 108 million open car loan accounts yet to be repaid. The pace and price of auto loans are accelerating, too. In the fourth quarter of 2017, average loans for vehicle purchases hit a record high of $31,099 for a new car, and $19,589 for a used vehicle. Considering that Americans average an extended mortgage period of 69 months, that figure boils down to average monthly payments of $515 and $317, respectively — both record highs.

Affordability, and the likelihood that the loans will be paid back in a timely manner (if at all) is a serious concern for analysts in the industry. On top of those who finance the purchase of a car, leasing remains a popular option, and in many cases a more responsible one. In Q2 2018, nearly 32 percent of new cars sold in the United States were leased. Many see leasing as a less daunting financial obligation than purchasing a vehicle outright. That’s why leasing is gaining popularity of late.

These monthly payment obligations are certainly a strain on the purchaser, but can also become a burden for the seller when those payments stop coming in. In 2015, Visa partnered with electronic signature company DocuSign to test blockchain-based smart contracts for leasing. These self-executing contracts simplify the process with fewer intermediaries involved, and could also provide reminders or even garnish wages for those who fall into delinquency without the need for lawyers and debt collectors.

Companies Trying to Solve This Problem

Smart Contracts for Insurance

Blockchain use cases in the automotive industry - Smart Contracts for Insurance

Between 2005 and 2015, there was an average of 5,808,272 vehicle crashes per year. This amounts to 15,913 accidents per day. That means there’s a lot of insurance exchanges, processed claims, and related investigations and transactions happening nearly all the time. If there’s any strained industry seeking improvements on speed, cost-effectiveness, and automation, it’s the auto insurance sector. In 2017, nearly $134 million in net liability insurance premiums were written.

Claims are becoming more frequent and more severe. Between 2014 and 2016, bodily injury claims rose 7 percent in severity and 2.2 percent in frequency, while property damage claims rose 11.5 percent in severity and 2.9 percent in frequency during the same period. Quite frankly, the auto insurance industry is bursting at the seams all the time, and it becomes more strained each year.

Those who seek to use blockchain technology for auto insurance purposes see the benefits of immediate storage of information like policy numbers and driver IDs on an interoperable ledger as a major benefit, whether it is for the sake of drivers, insurers, or the police. Additionally, there may be the possibility for a claim to execute at or just after the time of an accident, quickly paying out at least part of a claim so that a driver can be on the road more quickly. The smart contract aspect of blockchain technology could also prove a valuable cost- and time-saver in adjusting rates, gaining consent from the parties involved in an accident, and other unforeseen applications.

Companies Trying to Solve This Problem

  • Toyota & IBM  Partnering to create a system for secure data sharing for insurance rates. 

Theft Prevention

Blockchain use cases in the automotive industry - Theft Prevention

Stealing vehicles has never been so easy. According to The Telegraph, nine out of ten car thieves in England aren’t caught, and keyless technologies have only made the problem worse. In fact, 77 percent of vehicle theft cases in the country are closed without a suspect ever even being identified. In some places (and during certain cold seasons), finding a car to nab can be as easy as waiting in the parking lot on a chilly night: it’s 12 below zero and it will only take a second to run into the store, right? To put things in perspective, auto theft victims lost $5.9 billion in 2016, making a per-theft loss of $7,680. Though there is a 25-year downturn in car thefts, it does little to comfort those whose cars are broken into or stolen. Every day, more car theft victims are left wondering: How can these menaces to automotive society be stopped?

Blockchain has the power to provide next-level authentication, and it’s not implausible to project that identity-specific benefit being tailored to vehicle security. There are schools of thought that propose identity-specific unlocking mechanisms facilitated by blockchain-secured biometric data to prevent break-ins as the result of key theft.

Companies Trying to Solve This Problem

  • Porsche & Xain – Partnering to create blockchain based access security. 

Thorough, Transparent Vehicle History and Real-Time Alerts

Blockchain use cases in the automotive industry - Transparent Vehicle History

According to CARFAX, 57 million vehicles operating on American roadways have open recalls. Services such as CARFAX make their names by alerting buyers to recall orders and other flaws in a used vehicle before it is purchased, But this promise isn’t as reliable as it may seem. While CARFAX can be truly helpful, even the popular vehicle history service has its flaws and limitations. As one customer found out, his $20 CARFAX report didn’t reveal that hisCorvette was actually a “stolen recovery” with a branded title that depreciated its value by as much as $5,000 — after he purchased it, of course.

While the system may not be as effective retroactively, registering current vehicle history reports on a blockchain ledger and maintaining that ledger on an ongoing basis could provide a more reliable, unalterable standard for checking a vehicle’s history (and without the third-party expense). If real-time recall updates and other features can be incorporated into such a platform, the benefits will become even more apparent.

Companies Trying to Solve This Problem

  • MOBI  Non-profit consortium building solutions to trace the full lifecycle of a vehicle.  

Document and Title Transfer

Blockchain use cases in the automotive industry - Document and Title Transfer

It’s actually amazing how valuable a vehicle’s title is. Not only can title thieves put your vehicle’s in their name once they get ahold of your title, but just losing a title leads to the headache of acquiring a duplicate title. Without the title, it’s virtually impossible to prove that a vehicle is actually yours. Add on top of this that your car could be stolen outright. Motor vehicles were stolen at the rate of 236.9 per 100,000 people in 2016, a 6.6 percent increase from the previous year.

There’s also the possibility that your vehicle is given the Frankenstein treatment once it is out of your possession: chopped up, reassembled, and brandished with a fake VIN number so that it seems like a different vehicle altogether. If you’re unfortunate enough to own a 1997 Honda Accord, 1998 Honda Civic, or 2006 Ford F-Series pickup, your chances of losing a vehicle are particularly high. The point is that there are myriad ways to lose possession of your vehicle, title, or both, and losing any of the essential documents necessary to prove ownership, track down a vehicle, and drive legally is far easier a feat than it should be.

Blockchain platforms have already been conceived that store and verify information about the transfer of vehicle titles, as well as proof of sale, insurance, and other receipts that establish a clear record of ownership and legal documents. These records can prevent title theft, which muddies the waters on determining the actual owner of a vehicle, as well as provide a clearer record of a driver’s qualifications without the need for legacy paper-based documents.

Companies Trying to Solve This Problem

  • BigChainDB – Their CarPassport is designed to be a blockchain-based title and document platform for vehicle titles.
  • VinChain  Comprehensive vehicle data secured and verified with blockchain.  

Blockchain-Based Insurance Platforms

Blockchain use cases in the automotive industry - Blockchain Insurance Platforms

Due to the mandatory nature of vehicle insurance, it is one of the largest industries in all of the world (in the United States in particular). Vehicle insurance also represents one of the more lofty monthly expenditures for many drivers — average auto insurance expenditures rose 2.7 percent (from $865.34 to $889.01) between 2014 to 2015. New Jersey, the most expensive state for auto insurance in 2015, saw drivers pay an average of $1,265, while the city of Detroit saw astronomical rates of $10,723 per driver that year.

As of 2015, there were 268 million registered vehicles cruising American roadways, and the need for insurance becomes abundantly clear when one examines how frequently those vehicles crash into inanimate objects, pedestrians, and other vehicles. In 2015, there were 32,166 deaths, 1,715,000 injuries, and 4,548,000 car crashes involving property damage.Each of these instances required the time, effort, and cost that comes with exchanging information, filing claims, processing claims, and paying whatever out-of-pocket costs necessary.

The possibilities for blockchain-enabled vehicle insurance are many. Real-time policy updates, policy detail storage, and habit-based rate adjustment info could all be stored and automated using blockchain ledgers and algorithms.

Companies Trying to Solve This Problem

  • Kasko2Go  Blockchain-based auto insurance that offers better rates based on driving behavior.
  • RiskBlock  Blockchain Insurance consortium exploring solutions for the broader insurance industry.
About Sam Mire

Sam is a Market Research Analyst at Disruptor Daily. He's a trained journalist with experience in the field of disruptive technology. He’s versed in the impact that blockchain technology is having on industries of today, from healthcare to cannabis. He’s written extensively on the individuals and companies shaping the future of tech, working directly with many of them to advance their vision. Sam is known for writing work that brings value to industry professionals and the generally curious – as well as an occasional smile to the face.