Supply chain

Shared experience: The evolving potential of automotive blockchain

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The first part of our series on automotive blockchain tackled standardization. But with efforts such as the Mobility Open Blockchain Initiative — a consortium of worldwide technology leaders — breaking down barriers to shared ledger adoption, it’s worth looking at the practical potential of blockchain in automotive. What’s happening right now, what’s just over the horizon, and what’s the long-term vision for OEM blockchain value?

Blockchain today: Addressing asymmetry

Asymmetry is a common market condition. The underlying systems or services used by one manufacturer or supplier might provide in situ advantages, but those systems aren’t compatible with those of partners, suppliers or competitors. While competitive asymmetry favors the organization with the more efficient system, it naturally frustrates consumers, who expect transparency and reliability across digital transactions.

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This is the current value of automotive blockchain. Whether used for parts provenance or for tracking over-the-air software updates, shared ledger solutions help remove asymmetry from the market and put all OEMs on a level playing field. Consider a company such as Nestlé: As noted by Forbes, this founding member of the IBM Food Trust blockchain is testing public dairy supply blockchains to provide transparent product sourcing history, and the company has plans to publicize the data for its top 15 commodities.

For vehicle manufacturers, this type of transparency empowers users to trace vehicle parts or services back to their point of origin across secure public ledgers, which enhances overall market symmetry.

Blockchain tomorrow: Digital twinning

Developing virtual representations of physical products to model characteristics and reflect real-world changes helps organizations improve manufacturing processes and streamline operations. Creating true digital twins — identical digital copies updated in near real time that exactly match the physical experience of their counterpart — is the challenge. As Post and Parcel notes, digital twinning possesses massive potential, as it’s expected to grow more than 38 percent each year and build its value to $26 billion by 2025.

Blockchain provides the critical link between digital and physical twins. Shared ledger technology offers a kind of digital entanglement: when physical devices are part of the blockchain network, any modifications, additions or services performed become part of the shared ledger and are reflected by their digital twin. This makes it possible to avoid the problem of averages. Instead of using historical data to estimate the remaining useful life of vehicles or component parts, digital twins empower OEMs to more accurately predict how much useful life remains. As a result, OEMs can suggest proactive maintenance or upgrades to extend vehicle usability and avoid critical failures.

Blockchain beyond: Market mobility

Mobility is the next step in automotive blockchain. Two key factors will play a role: data collection and reputation.

Consider the insurance industry. Though the industry’s historically been slow to adopt new technologies, Insurance Business magazine points to a significant uptick in usage-based insurance, which measures how far, how fast and how well vehicles are driven by consumers to provide customized insurance rates that are often 20 to 30 percent cheaper than standard plans.

In-car mobile devices underpin this new insurance model, as they enable companies to quickly and accurately collect the data they need. And the uptick of ridesharing and food delivery services that rely on user scorecards to determine overall reliability and value makes it clear that users are willing to leverage shared mobile networks as a way to communicate critical experiences and make decisions around both initial purchasing and long-term loyalty.

For automotive OEMs, secure blockchains offer a critical platform for mobility scores that determine the OEM’s relative value and reliability. What could this look like in practice? According to Disruptor Daily, blockchain could be used to collect key data about driving habits to reward users and limit potential damage.

But that’s just the beginning. Manufacturers could develop vehicle-as-a-service solutions and pair them with digital twins to deliver vehicles and maintenance on demand. Need a truck for weekend camping excursions? Order one via the OEM’s app. Time for regular maintenance? Mobile reminders notify users and allow them to schedule at-home vehicle services.

Blockchain forms the foundation of these reputation-based transactions by providing secure data history and accuracy to enhance user confidence in shared mobile ratings and reviews.

Building blocks

Blockchain is driving automotive evolution. In the near term, reduced asymmetry should help boost usability and reduce complexity, while the emergence of digital twinning offers a way to merge physical and virtual vehicle incentives. Farther down the road, blockchain will empower mobility-driven, reputation-based scores that will enhance consumer confidence and deliver proactive supply and service on-demand.

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Client Partner, Automotive Industry - IBM Global Business Services

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