Blockchain Seen As Key to Realizing Connected Car Revenues

Blockchain technology is often lauded as being able offer improved security, transparency, and speed of transactions between data sets.

Proponents of the technology, where a shared database exists on multiple computers across a distributed network, could help speed development of new digital services improving driver safety and convenience by breaking down data silos and enabling multiple parties to work together to extract the full value from their data. However, some high-profile cyber security breaches in cryptocurrency, one of the main theaters of blockchain use, still raise questions over the its deployment.

That said, carmakers could use blockchain for a number of reasons, including a decentralized registry for vehicle information and secure transmission of data, including vehicle software updates and passing of information in real time. This could increase the value of the automakers’ proposition for consumers over the lifetime of their vehicle by being able to offer a service that is continuously and securely updated.

“At present the majority of OEM revenues are derived from the initial sale of the vehicle, however, as the market progresses OEMs will be able to leverage the vast amounts of data that can be transferred over blockchain technology,” said Windsor Holden, Juniper Research head of forecasting.

Holden explained the level of investment depends on how carmakers employ the data collected by blockchain to improve their product offerings and services through the insight gained. “We anticipate that these players will soon have no other choice to use blockchain for automotive data if they wish to remain competitive in the industry,” he said.

Blockchain could enable micro-transactions between the vehicles and other parties, including them auto manufacturers, road infrastructure and other vehicles to create a decentralized registry. “We needed to find a transaction platform to move the data between two parties,” Werner Koestler, head of strategy at Continental’s interior division, told TU-Automotive. “We have used blockchain to enable data sharing. The connected car generates data – a lot of data. The distributed ledger architecture of blockchain makes it easy to add contracts to use that data, whether that is exchanging other data or actual money.”

Beyond data monetization, the benefits that can accrue in supply chain finance will also be a key driver, removing the dependence on time-consuming, paper-based processing and reducing the settlement period between a manufacturer delivering vehicles to distributors or dealers and receiving payment for those vehicles.

Koestler explained the target groups for this technology are the automakers themselves, offering a simple service, such as weather forecasts containing information about black ice, can be improved through blockchain to help gather more data. “We need to find ways to break down data silos and enable multiple parties to work together to extract the full value from their data, he said. “In the case of connected vehicles, data sharing across different automotive brands is key to providing driver-assistance services that help drivers and the services in the car need data to operate to a certain quality level.”

Several existing digital ecosystems enable data sharing based on a middleman model, where platform owners centrally coordinate the data flows and monetization, but a decentralized architecture based on blockchain technologies could provide data sovereignty to all participants in the ecosystem. Koestler said it all comes down to improvement of the quality of service and that means using blockchain technology to extend the network to partners for inter-modal solutions, such as a park-and-ride program or connection to public transportation.

“Then the models develop and kick in and then you can monetize that data,” he said. “It doesn’t require any change in the cars. The features are there, it just allows them to improve these features. It’s a complete solution that’s located in the backend. The key point is really to improve the quality of service being offered by providing access to more data points.”

When it comes to security, Holden said the onus is on automakers to ensure that vehicle owners are aware of the data being collected and to gain permission from the driver. There is also the fundamental problem around the “right to be forgotten”; to delete data if required. Given that data on the blockchain cannot be deleted, this then poses questions around precisely what data can be stored on-chain. “We expect the anonymization of data and through wholesaling of information in to play a key role in gaining the trust of vehicle owner,” he said. “While there are unlikely to be any significant security concerns regarding blockchain, consumers are very conscious of the data being collected on their activities.”

Continental and HP’s platform, for example is compliant with the VDA Nevada Share & Secure concept developed by the German automotive industry to govern the secure transmission and transfer of vehicle generated data to third parties.

— Nathan Eddy is a filmmaker and freelance journalist based in Berlin. Follow him on Twitter.