Sentiment for the cryptocurrency market has plummeted to bearish levels this year. For example, while some experts believe Bitcoin could top $100,000, the price of Bitcoin fell to below $16,000 in November this year.1 However, despite the pros and cons of the cryptocurrency market, the prospects for blockchain (the underlying technology of cryptocurrencies) are much better. Analysts predict that the global market for blockchain technology will expand from its current estimated value of $3.4 billion to $19.9 billion by 2026.2
Blockchain benefits for the automotive industry
Many industries have adopted blockchain technology, and the automotive industry could also benefit from widespread adoption of blockchain technology. The automotive industry has traditionally suffered from operational problems in procurement, tracking, and payment processes. Here are some ways blockchain technology can help overcome these problems:
- trustBlockchain increases the trust of supply chain members in supply chain data because blockchain data is decentralized (in short, Data is stored and shared across multiple sites, countries, or institutions) and immutable (i.e., cannot be changed). In the automotive industry, where trust in data is particularly important for safety and risk mitigation reasons, blockchain could offer a useful solution.
- efficiencyBlockchain effectively tracks every step of a product’s life cycle as all data is recorded at every step of the supply chain and can be seen by every member of the supply chain. supply chain nonconformities (for example, product defects, product quantity shortages, etc.). Advances in more efficient defect identification processes could reduce costs for the automotive industry amid a surge in recalls over the past decade.3
- TransparencyAll data on the blockchain is automatically time-stamped, including certain data not typically recorded by traditional supply chain systems (such as the steps completed in the production process or the time the seller received the order). blockchain creates transparency. ). Blockchain technology also creates transparency by enabling end-to-end traceability (i.e., traceability from one end of the supply chain to the other). In this era of electrification and autonomous driving, robust traceability mechanisms are essential in the automotive industry to prevent safety and quality defects in the manufacturing process.Four
Several challenges exist regarding the implementation of blockchain processes in the automotive industry. For example, although blockchains are considered a highly secure means of data storage, some of the other attributes of blockchains (decentralized and immutable) comply with the California Consumer Privacy Act of 2018. (Cal. Civ. Code § 1798.105) (“CCPA”) and the EU General Data Protection Regulation (“GDPR”) (for more on this, see The Legal Implications of Blockchain in Supply Chains: What the Law Has to Do With It) of?). Additionally, the initial cost of implementing a blockchain solution can be high. Hiring a blockchain developer tends to cost more than a traditional developer due to the blockchain developer’s expertise.
Adoption of blockchain in the automotive industry
Some car companies have started piloting this new technology. In 2019, the Volkswagen Group worked with technology company Minespider to trace raw materials to their origin.Five In 2020, Tesla announced that it will work with various battery supply chain participants to implement a blockchain solution that will improve the transparency and traceability of nickel and cobalt.6 The BMW Group has announced that it successfully implemented a blockchain pilot product for purchasing front lights in 2019 and plans to expand the program in 2020.7 Earlier this year, Andre Luckow, head of innovation and emerging technologies at BMW Group IT, told The Wall Street Journal that the blockchain technology program implemented by BMW Group was “an exciting opportunity to accelerate data visibility across our value chain. The initiative has proven to be fruitful.”8 Luckow also revealed that the BMW Group is looking into blockchain use cases to improve the driver experience. We are partnering with the German government to use blockchain to improve the driver license verification process and simplify the vehicle purchasing process.9 In the not-too-distant future, Luckow says, “it could be as easy as scanning a QR code to buy a car.”Ten
Although the adoption of blockchain technology in the automotive industry has not been rapid, some automotive companies have achieved success with their blockchain programs, and we can expect a steady acceleration of the implementation of blockchain solutions in the automotive supply chain. .
1. Alex Gary et al. Expert Bitcoin Price Prediction: $10,000 to $28,000 After 2022Next Advisor in partnership with TIME (November 21, 2022), https://time.com/nextadvisor/investing/cryptocurrency/bitcoin-price-predictions/.
2. Business Wire, Blockchain Technology Global Market Report 2022: Unprecedented Losses Sustained in Supply Chains Booms For Integrated Blockchains to Strengthen Resilience and Trust – ResearchAndMarkets.combusinesswire, Berkshire Hathaway Company (18 August 2022), https://www.businesswire.com/news/home/20220818005608/en/Blockchain-Technology-Global-Market-Report-2022-Unprecedented-Losses-Sustained. -In-the-Supply Chain Bodes Well for Integration Blockchain to Enhance Resilience Trust—ResearchAndMarkets.com.
3. Michael Weiland Recalls and Corruption Investigations Reshape Auto Industry for 2020sCNBC (December 28, 2019), https://www.cnbc.com/2019/12/27/recalls-probes-reshape-auto-industry-heading-into-2020s.html.
4. Marlene Kuhn et al. Blockchain architecture for automotive traceabilityProcedia CIRP, Volume 97, 2021, https://www.sciencedirect.com/science/article/pii/S2212827120314785.
Five. From mine to factory: Volkswagen makes supply chain transparent with blockchainVolkswagen (23 April 2019), https://www.volkswagenag.com/en/news/2019/04/volkswagen_blockchain_minespider.html#.
6. Impact Report 2020Tesla, https://www.tesla.com/ns_videos/2020-tesla-impact-report.pdf.
7. BMW Group uses blockchain to drive supply chain transparencyBMW Group (31 March 2020), https://www.press.bmwgroup.com/global/article/detail/T0307164EN/bmw-group-uses-blockchain-to-drive-supply-chain-transparency? language= en.
8. André Lucouf BMW Group navigates a blockchain-driven futureThe Wall Street Journal (15 April 2022), https://deloitte.wsj.com/articles/the-bmw-group-navigates-a-blockchain-driven-future-01650045838.
The content of this article is intended to provide a general guide on the subject. You should seek professional advice for your particular situation.