2 minute read 10 Sep 2019
Blockchain’s profound impact on the automotive industry

Blockchain’s profound impact on the automotive industry

By

EY Ireland

Multidisciplinary professional services organization

EY Ireland, a leading global professional services organisation providing assurance, tax, audit, transaction and advisory services.

2 minute read 10 Sep 2019

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Over the last two years, many automakers have started to explore blockchain technology in supply chain, security, car service, and blockchain for autonomous vehicles. 

Blockchain is set to become prominent in the automotive industry in the same way as disruptive technologies like artificial intelligence, machine learning, high-performing GPS and sensors.

Over the last two years, many automakers have started to explore blockchain technology in supply chain, security, car service, and blockchain for autonomous vehicles. 

Autonomous vehicles will likely change the traditional business models currently used by auto manufacturers and dealers. Transportation as a service will replace, at least partially, today’s vehicle ownership model and create new revenue models and opportunities. 

If we look at the value chain of the automotive industry, it’s evident that procurement, manufacturing, distribution and service functions will all benefit from the distributed, immutable, and resilient nature of blockchain technology.

Benefits of blockchain

Blockchain is well suited for new revenue models because it allows micro-payments based on actual vehicle usage and fractional vehicle ownership. Vehicle title transfer can be also simplified and streamlined using blockchain by providing one publicly available ledger that can be accessed by interested parties on an ‘as needed’ basis. 

Blockchain can effectively enable preventive maintenance by informing spare part suppliers and service shops about requirements based on data received from the vehicle. 

Supply chain, including vehicle shipments, can be optimised providing seamless integration of digital contracts, shared inventory and logistics information, pricing, invoicing and payments. 

Spare parts provenance on blockchain can help prevent counterfeit issues, expedite vehicle recalls if required and increase vehicle safety as a result. 

Automotive companies can also benefit from using blockchain to streamline back-office functions in areas like finance and acccounting. 

Preparing for the next generation of business models

Case study: EY Tesseract 

The problem: With the use of more sophisticated technologies, car prices are rising, but many vehicles are only used for a fraction of the day, creating idle capacity.

The solution: EY Tesseract is an integrated mobility platform underpinned by blockchain technology. It is a blockchain application for Original Equipment Manufacturers (OEM) that provides a pool of cars, with fractional ownership for users. Owners can make use of any of the pool cars without actually spending the entire cost, and all owners, including the OEM, get profit shares depending on ownership percentage. 

With Tesseract, vehicles and trips are digitally logged on the blockchain, and transactions are automatically settled between owners, operators and third-party service providers through a single-source, usage-based payment system. Ownership of the assets is flexible and can be on a full or fractional share basis.

Value delivered: 

  • Enables true peer-to-peer interactions between owners and users

  • Reliable means of selling the shares of cars 

  • Maintains immutable record of ownership and usage payments

The automotive industry has a huge amount to gain from blockchain technology, with benefits across the entire value chain. 

Blockchains’ capacity for secure, verified digital transactions in real time will introduce cost savings, faster and more efficient operations and service, and, importantly, more safety and convenience for drivers.

Summary

Blockchains’ capacity for secure, verified digital transactions in real time will introduce cost savings, faster and more efficient operations and service, and, importantly, more safety and convenience for drivers.

About this article

By

EY Ireland

Multidisciplinary professional services organization

EY Ireland, a leading global professional services organisation providing assurance, tax, audit, transaction and advisory services.