Blockchain Innovation in Auto [Technology Driving an Industry Forward]

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The multi-trillion dollar commercial automotive industry is as old as Ford’s original Model T, yet that does not mean it is immune to change or vested in rigidity. Indeed, increasing technological advancement is leading the Big 3 auto companies to the same conclusion that leaders in other industries have already reached: blockchain is tied up with their future.

Indeed, as the industry becomes more and more digitized with the advent of self-driving cars, in conjunction with the development of smart cities, original equipment manufacturers (OEMs) are finding their working mode and workflows changing, as well as their business models. These and other crucial actors in the automotive industry are finding themselves pressured to be at the forefront of digital transformation, and to embrace rather than oppose disruption, since these developments mean that cars will soon need to interact with their environments digitally to operate optimally.


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Blockchain is a crucial building block to the automotive ecosystem of the future, connecting cars to their environment to enhance pedestrian safety and optimize speed and fuel economy. Automation, combined with a transparent and validated transaction process, will birth the development of an incredible number of new features and service offerings centered around transparency, physical security, and environmental interactivity founded on blockchain technology, and the auto industry is just getting started.

The auto industry is ready to be disrupted by blockchain, but these 4 industries stand to be changed forever.

The first use case to look at here is supply chain inbound plant logistics. Here, manufacturing plants coordinate with tiered suppliers, 3rd party logistics and transportation companies to deliver parts and build inventory for automotive companies. Blockchain would enable greater transparency via token-based supply tracking, attaching digital tokens to auto parts and effectively creating transactions between all businesses in the chain, maximizing accountability by turning the entire proposition into one digitized transaction, improving information transfer and logistics coordination, while reducing errors in ordering and inventory cataloging.


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Financing automotive supply chains would also become easier once integrated with blockchain technology. Right now, car manufacturers wait weeks to months to receive payment from parts importers, distributors, and dealers. This is primarily caused by the disjointed nature of the various kinds of companies in the automotive supply chain, since different companies control different steps in the chain, such as issuing Letters of Credit via bank, or submitting Bills of Landing via manufacturer, all of which require heavy paperwork loads.

Blockchain would make these processes paperless and drastically reduce the number of steps and tasks in the workflow, increasing the processing speed of import/export and banking documentation. Altogether, settlement would be drastically expedited prior to manufacturers receiving payment for delivered cars. Such a blockchain implementation requires expertise, which blockchain consultancy firms can offer.

In terms of the retail portion of the automotive value chain, three principal aspects are worth mentioning: sales, service, and finance. And common to the successful execution of these 3 go-to-market tasks are one operative variable: vehicle history. Consumer automotive finance professionals do not currently have access to information on driver behavior or vehicle service history, which makes it hard for them to accurately gauge the residual value of buyers’ vehicles.


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Integrating blockchain technology into these workflows would facilitate the transmission of customer driving patterns and all derivative service events to digital ledgers shared between these automotive professionals and their customers. The main value-add here is that automotive finance professionals would finally have access to fully transparent information about their customers’ vehicles’ wear and tear, helping them, in turn, accurately gauge the residual values of their customers’ vehicles over time, up to the end of their customers’ lease dates.

Vehicle and brand experience, essentially a consumer-driven lock-in-key system giving retailers social proof to sell vehicles, would be improved by blockchain-enabled personal mobility profile inter-car connectivity, syncing seat, climate, informational and entertainment preferences between multiple vehicles. Put simply, with blockchain, retailers giving customers access to different cars for different occasions would be able to transfer customer preferences between cars, essentially blurring the line between one car and the other in terms of interior experience, simultaneously improving driver experience and retailer margins.


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Finally, coming to the end of the automotive value chain with spare parts and warranty, all car manufacturers currently risk selling vehicles fitted by service centers and garages—unwittingly or knowingly—with counterfeit parts. As stated previously, blockchain’s ability to create value-based tokens, and affix them to assets such as car parts, would allow service centers, customers, and manufacturers to trace the origin of all car parts backwards to their original dates of manufacture and locations. Instituting such a trust-based system would massively reduce brand reputation damage and warranty costs for car manufacturers should counterfeit costs underperform or cause accidents.

While it may be an industry that hasn’t been disrupted in quite some time, the automotive industry could become significantly more efficient and trustworthy if it adopts blockchain and its benefits.

I hope you enjoyed this eight part series on blockchain innovation, and I plan on keeping a close eye on this technology in the months and years to come.

Blockchain startups are sprouting up constantly, but these 11 have caught the eye of blockchain experts everywhere.

H. Caleb Simmons

Staff Writer

H. Caleb Simmons is a writer, startup community organizer, and blockchain enthusiast. With a background in politics and government, Caleb is highly interested in impact investing and hopes to make a positive impact on the world. (All writing is my own; does not reflect the preferences of my employer)