Need Of the Automotive Industry
The automotive sector is facing slow down and heading towards transformation to electric vehicle category, in this situation tech solutions and innovation can only help in the process. Recently TATA Motors launched a new platform TACNet 2.0 to identify startups and technology firms that help in developing blockchain-based solutions for the company. Automotive giants like Toyota, BMW, Porsche already started using blockchain technology to make their entire automotive ecosystem efficient, cost-effective and improved.
It’s estimated that 62% of the automotive industry is set to utilize blockchain technology for various purposes by 2021, mentioned in the report of IBM institute for business value. Blockchain technology offers disruptive solutions to the struggling automotive industry.
First of all, how does Blockchain Technology work?
Blockchain technology helps in free, safe and automated transfer of information. Like one party to a transaction initiates the process by creating a block (secured digital record of Information- problem). This block is verified by the web network of millions of computers. The verified block is added to a chain( Which is unique with a unique history like a unique problem) then web miners try to find the solution of the block, which can satisfy network-wide target. The solution is accepted if it can never be falsified. The miners or coders who solved the puzzle are rewarded and the block is distributed through the network. An example maybe while we make payment through credit card certain processing charge is deducted by the bank, with blockchain technology this charges can be removed and transaction between buyer and seller can be done directly.
How it can disrupt the automotive sector and give solutions to the key problems?
1. Smart Contracts:
Blockchain technology helps in developing smart contracts. Smart contracts mean contract done and recorded on the distributed digital ledger ( Like passbook of a vehicle) which can never be altered. Smart contracts may help automotive companies in identifying consumers and ready on hand information about insurance, vehicle finance, and spare parts purchase may be available. With Smart contracts also known as distributed ledger technology(DLT), automotive companies can track the total lifecycle of the vehicle.
2. Supply Chain:
The automotive industry is following a very complex supply chain management structure. There are multiple components, spare parts are required to manufacture a vehicle, which is available from multiple suppliers, resources. Due to the complexity of the supply chain system, automotive companies have to face problems of delay, defectives, damage or duplicates leading to higher cost and it also makes the manufacturing process lengthy and timeconsuming. Blockchain technology helps in developing digital records of product, which includes the source of the raw materials, from where it is purchased, how and where they were manufactured, when added to the final product, and timing of their maintenance and replacement. Blockchain technology makes supply chain hierarchy simple.
3. Enhanced Mobility:
Blockchain technology makes it easy for the consumer to use the vehicle efficiently. As the technology makes data sharing easy, it may help automotive companies to develop a platform through which consumers can lease their vehicle for a short term or share a vehicle ride. Consumer and vehicle owner can interact directly through the app. Enhanced mobility also makes vehicle affordable and indirectly reduces pollution also.
4. Ease of Insurance and Finance:
As blockchain technology help in maintaining a record of the total life of a vehicle by DLT, it can help in faster clearance of vehicle loans, insurance claims by the Finance/ insurance company.
5. Electric Vehicle(EV) battery refueling and replacement
Through the smart contracts developed through blockchain, EV’s battery lifecycle can be traced as information related to manufacturing, usage and all operational history can be stored on a smart contract. This may help automotive companies in setting up battery recharge/replacement centers, This facility may encourage consumers to buy EVs.Because battery recharge/replacement is the biggest problem which the electric vehicle industry faces.
This way, BlockChain technology deals with the key issues of the automotive sector and helps in establishing the market of electric vehicle