How will blockchain affect the future of the automotive industry?

(Image Copyright: Ümit Yildirim/Source: Unsplash]

The transport industry has evolved considerably over the years, and incredible ideas that only seemed possible in a fictional world have now become a reality. Electric cars and autonomous vehicles are unprecedented innovations designed to improve travel, making it more convenient and faster. But in urban areas, commuting has significant environmental and financial costs, leading to massive greenhouse gas emissions. Since India has a high population, the country has developed a solid mass transportation system.

However, some issues still need to be resolved, and using blockchain is the ideal solution. While many associate it with cryptocurrency, blockchain has applications in several industries. The financial sector implemented this technology a couple of years ago and is benefiting significantly from it, and today the automotive industry is also embracing blockchain as it begins to discover its benefits. Let’s explore this topic further.

Blockchain and transit systems

Blockchain is a decentralized database and at the same time a technological innovation that can help reduce costs and reduce risk by introducing new business models in transit systems. This technology can increase market transparency, immutability, efficiency and consensus. Embracing public transport is the key to efficiency and sustainability in society. People no longer see public transport as outdated, largely because of the campaigns that have promoted its role in minimizing pollution.

Blockchain powers logistics, tourism and the future of transportation, bringing multiple benefits to transit systems. For example, this technology has the potential to facilitate carpooling. Indian transit systems depend on stakeholders such as governments, local and national governments, infrastructure owners, commuters, etc. However, these stakeholders have vested interests that negatively affect the success of the transit system. This is where blockchain technology can help, as it provides new ways to increase cooperation between those involved in transport systems. This results in a better result for travelers, reduces costs and reduces environmental impact.

Blockchain applications in the automotive industry

Some car companies have understood the importance of adopting blockchain to improve the future of transport. Here are some companies that have adopted the technology:

• Marelli Automotive Lighting has implemented blockchain to enhance the company’s supply chain management for the automotive industry. This is possible through a distributed peer-to-peer network connecting car manufacturers and global suppliers.
• The BMW Group uses blockchain to ensure the traceability of components and the procurement of raw materials in the international supply chain process.
• Cruise LLC seeks to use blockchain to collect data from car sensors and develop a reliable map for self-driving cars.

These are just a few examples of companies that opened up to the idea of ​​blockchain, but many car companies today accept crypto as a payment method for their services. For example, luxury car brands allow you to buy a car with Bitcoin. Similarly, Tesla accepts Dogecoin. More companies are likely to adopt blockchain in the near future in one way or another and embrace popular cryptocurrencies such as Bitcoin and Ethereum. It will increase the companies’ customer base, as people learn more and more where to buy ethereum and how to trade this currency most effectively. Customers prefer multiple payment options, and since many people are buying ethereum and other digital assets today, businesses will greatly benefit from adopting it.

Challenges in the automotive sector and how blockchain can solve them

The automotive industry uses green, smart and energy-efficient technologies. However, these new trends present challenges that hamper the car manufacturer’s processes. Let us discuss these issues in detail.

Insurance fraud

Insurance fraud is a frequent problem in the automotive industry; Fraudsters can either submit a false claim or several that often go undetected. Unfortunately, this leads to financial losses for car insurance companies.

However, blockchain can solve the problem by sharing data about drivers’ behavior. This helps insurance companies establish premiums by looking at claim history. Manual processes can be time-consuming, but blockchain simplifies all paperwork. Since it is impossible to change records on the blockchain, false claims will be quickly identified. Simply put, combining blockchain and IoT makes the claims processing process significantly easier.

Car sharing

When it comes to the future of transportation, there is no doubt that car sharing will be a part of it. But while this technology is developing rapidly, car sharing services have their own limitations and flaws. In many cases, shared vehicles did not respond to identification keys on mobile devices, leading one to wonder how reliable these systems are.

Fortunately, blockchain can improve them because it guarantees immutability regarding car rental history. This means that if an accident occurs, the car-sharing company can identify the driver at the time of the accident. Smart contracts also improve car sharing by automating tasks such as toll calculation.

Monitoring of vehicle history

Suppose there are reports of failures on different vehicles; after they leave the dealers, they cannot be traced, making the recall process complicated and time-consuming. Without a proper tracking system in place, the risk of fraud in the spare parts market increases. For example, tracking stolen cars and odometer parts is very challenging because you cannot look into the ownership history.

Using blockchain can help trace a car’s history from the beginning to the end of the dealership, as the technology stores data such as checks, mileage, accident damage and ownership details. Moreover, blockchain also benefits car buyers, allowing them to ensure that the vehicle is legal and perfectly maintained.

Counterfeit spare parts

Counterfeits have always been a threat to auto parts manufacturers, and there doesn’t seem to be any system that can solve this problem. Without a solution, many manufacturers of fake parts enter the market. And the loss of money is not the only consequence – the safety of drivers and passengers is also at risk. This also affects the image of car brands.

With blockchain, transport companies no longer have to worry about these aspects. If everyone uses the same supply chain, the risk of counterfeit parts is significantly reduced. In addition, this technology allows manufacturers to identify inefficiencies in their supply chains and take steps to fix them. Blockchain and IoT together enable reliable monitoring that eliminates counterfeit parts in the market.

The bottom line

Blockchain is undoubtedly a game-changer in the world of finance and business, but it could also result in a better future for the automotive industry. That’s because of its power to improve collaboration and information sharing. Once companies in transit systems have implemented this technology, it won’t take long for the results to become apparent.