Blockchain in Automotive Industry: An Overall Guide

Blockchain technology came into practice about 10 years back. At the very initial stage of its invention, it acted as the typical backbone of...
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Blockchain in Automotive Industry: An Overall Guide

Blockchain technology came into practice about 10 years back. At the very initial stage of its invention, it acted as the typical backbone of different electronic processes, however, with time it has begun as a new spectrum. Nowadays, the nature of blockchain has evolved as a prominent future of the digital economy. It is helping multiple industries with its credible potential. Among all other industries, the automotive industry is one of the most benefitted sectors. The blockchain technology solution is one of the advanced technologies that are powering the automotive industry in an innovative way and paving the path of the blockchain revolution.

Some Challenges that Drag Down the Credibility of the Automotive Industry

Keeping an eye on the visible complexity and scale of the recent automotive industry, there is no doubt that this particular sector is facing immense challenges. A multistage manufacturing process, Complex supply chains, regulatory compliance, aftersales services, and car dealership networks are some of the automotive sectors that need extra attention in terms of the implication of blockchain solutions and practices that could help this sector overcome all challenges and protect from further failure.

On the contrary, Emerging technologies that are beginning to transform the automotive environment, like electric and driverless vehicles, only serve to increase the sector’s complexity. Fortunately, automakers now have a potent new tool in blockchain that can aid in cost reduction, process improvement, supply chain management, and accountability.

How can blockchain help the automotive industry?

Blockchain technologies offer some core features such as transparency, decentralized nature, and lastly immutability that fit perfectly in addressing some of the complex issues of the automotive sector daily. By allowing users to view a vehicle’s whole history and establishing practical methods of communication with after-sales service providers, blockchain systems can bring real advantages to the end user. There are several possible uses for blockchain in the automotive industry. Let’s look at a few of the ways that technology can help the industry.

  • Network effects: For the successful implication of blockchain technologies, it needs to be adopted by several stakeholders that play a crucial role in the automotive industry. 
  • Scalability: Being decentralized and complex, this particular industry embraces blockchain solutions to upscale its credibility. 
  • Cost: The cost-effectiveness of blockchain technology solutions in all business processes of the automotive industry is highly recommended. 
  • Regulatory environment: Countries across the world must take into consideration the data security, and privacy regulations while incorporating blockchain solutions to the automotive industry.  
  • Performance: The overall performance of blockchain technologies need to get upscaled for the purpose of handling a large number of data and transactions. 
  • Integration process: Blockchain solutions help in integrating a huge amount of data of customer management systems and inventory tracking for the automotive industry. 
  • Awareness and Education: There is an immense need for awareness and education of the potential advantages of this technology leads to skepticism of further adoption.
  • Talent Gap: It is important to look for professionals with proper skill sets who can showcase their expertise in incorporating blockchain solutions in the automotive industry.  
  • Security: All automotive companies must ensure that the blockchain networks they are using, must be secured from malicious attacks. 

Blockchain Use Cases in the Automotive Industry

Let’s take a look at many crucial use cases of blockchain technology in the automotive industry.

Customer Data Management

Customer data management is a crucial use case for blockchain in the automotive sector. Customers can securely and discreetly store all of their driving data using blockchain on a distributed ledger system. After that, the businesses can utilise the data to offer specialised services like route optimisation, extensive cost analysis, vehicle suggestions, and predictive maintenance.

Supply Chain Management

This is probably one of the most popular use cases of blockchain solutions in the automotive industry. Blockchain development solutions enable companies from the automotive industry to keep track of the parts and components extracted from the raw material suppliers through distribution, assembly, delivery, and distribution of the different products. To add to this, the  blockchain technology supports tracking further costs and all real-time visibility. This ensures a close tracking of exact parts of the product and services of the use cases. 

Payment Solutions

The blockchain solutions can also help the automotive industry with its payment solutions. The use of smart contracts and different digital wallet solutions support faster facilitation of different internal operations.  It ensures secure payment operations between the respective customers and car suppliers or manufacturers. A safe and efficient transaction process is maintained through the implications of blockchain technologies. 

Sourcing of materials

The blockchain can be used by automotive businesses to confirm the moral source of their products. Distributed ledger technology allows manufacturers to track and audit the supply chain to guarantee that they are buying their raw materials from reliable vendors who do not violate human rights or cause environmental harm.

Digital Identities for Vehicles

Finally, they can build digital IDs for vehicles using blockchain technology. Non-fungible tokens that represent digital identities enable tracking and monitoring of automobiles throughout their full life cycle, from manufacturing to ownership. Additionally, it makes it simpler to verify insurance coverage, register automobiles, and transfer ownership.

Concluding Thoughts

Blockchain solutions are continuously improving and proving their credibility as emerging tech solutions. It is speculated that in the coming one or two years this particular technology will be ruling the automotive industry by solving many challenges that this industry faces.