On 2 May a total of 36 partners, including carmakers BMW, Bosch, Ford,General Motors and the Renault group, announced that they were setting up the Mobility Open Blockchain Initiative (MOBi) consortium, which brings together "forward-thinking vehicle manufacturers and consumer-facing mobility providers" plus blockchain experts, to work on applications of blockchain technology in the automobile sector. Headed up by Chris Ballinger, former CFO and Head of Mobility Services at the Toyota Research Institute, the new consortium intends to look at potential blockchain uses in the auto sector from various different angles. "MOBI will have to work on cross-industry standards for the auto industry", points out Sébastien Henot, Manager of Business Innovation at the Renault Innovation Lab in Silicon Valley, explaining: "If in the near future new entrants want to offer distributed services through blockchains, instead of having to go and see each and every manufacturer every time they will be able to use, as a basis for their solutions, common standards that will serve for all vehicles." In addition to such technical standards – given that the aim of the exercise is to create business ecosystems – the auto manufacturers are teaming up so as to share use cases and business models. "Everyone has been working on digital car passports, and some automakers have been thinking about interesting use cases. We now need a wider thinking process on use cases so that these can feed into the work on standards", underlines Henot.
blockchain: A BULWARK AGAINST THE TECH GIANTS?
The Blockchain: a tool to help regain the upper hand over the tech giants
If tomorrow Google or Apple wanted auto manufacturers to use their blockchains, they would be the owners of the highway and we would have to pay the toll.
Although the normal practice in the auto industry has generally been for each manufacturer to innovate independently of its competitors in order to gain competitive advantage, when it comes to use of blockchain technology, the approach appears to be to team up in a consortium, particularly with a view to standing up against the tech giants. Sébastien Henot stresses: "MOBI intends to be an open, truly decentralized ecosystem. This is a way to address the ecosystem in a joined-up manner. Traditionally each auto manufacturer develops its own technological solutions; however, the likes of IBM, Google and Apple offer industry-wide technology solutions, which are stealing a march on the manufacturers." Some commentators go so far as to say that the fundamentally decentralized nature of blockchains provides an alternative to the models which have emerged on the Internet to date and are moving inexorably towards global monopolies. "If tomorrow Google or Apple wanted auto manufacturers to use their blockchains, they would be the highway owners and we would have to pay the toll. This is exactly what has been happening for years in the world of 'infotainment', where it's the tech giants who today hold the value", Henot points out. Once MOBI's various working groups have been set up, the consortium will work to implement blockchains that will basically be controlled by the auto manufacturers, because while other players, such as IBM, will be taking part in the work of the consortium, the manufacturers will exclusively have the decision-making power.
Blockchain ON THE ROAD TO PREDOMINANCE IN SELF-DRIVING CARS
First use cases now being trialled
The reason why the manufacturers in the MOBI consortium – which jointly account for 70% of worldwide automobile production – wanted to get together to focus on blockchain technology is that the first use cases are now emerging and they have realized that it is high time to start coordinating their efforts.Among the first initiatives was the work by the Toyota Research Institute presented at the Consensus 2017 conference in New York in May last year on the theme of 'Making Blockchain Real', where Toyota demonstrated its first 'proofs of concept' developed with Oaken Innovations, a startup which is aMOBI founder-member. The partners have created an open system using a secure mobile application running on the Ethereum blockchain. The architecture has also been implemented in order to enable vehicles to pay toll charges directly, without the need to go through a payments operator.
USE CASE: Porsche panamera
Porsche is another pioneer as regards blockchain applications used in vehicles: last year the company held its first innovation contest for startups on this theme. Out of a hundred companies that entered the competition, Berlin-based startup XAIN led the pack and subsequently worked for three months on blockchain applications at the Stuttgart-based car firm. This resulted in XAIN equipping a Porsche Panamera with its mining technology and developing it for a number of use cases. Blockchain technology was used for storing the position and working parameters of the car and XAIN created an application to lock and unlock the car doors, using the blockchain so as to increase the car’s protection level. The offline technology developed by theGerman startup enabled the time required for identification prior to the car doors opening to be reduced to 1.6 seconds. When it comes to this type of application, blockchain technology can also make it simpler to share the digital key with third parties in such cases as a car-sharing service, or where an e-commerce site wants the driver to be able to pick up the ignition key from the car boot.
Among the future applications Porsche is now thinking about are recharging its forthcoming electric vehicles via 'Smart Contracts', small applications hosted and implemented on the blockchain. Uwe Michael, Head of the Electrics/Electronics Development Division at Porsche, enthuses: "This modern technology will make our offensive on the electromobility front easier, especially by making authentication at recharging stations and for payment faster, simpler and safer." In addition to these projects, which have been made public, auto manufacturers and their partners are currently looking at many other applications. MOBI's launch press release lists seven major use cases, including inter alia the supply chain technology for tracking car parts throughout their life cycle, payments and car-pooling.
A maintenance logbook on the blockchain, by IRT SystemX
In the future every car will have its digital identity on the blockchain with the manufacturer's number, the type of vehicle, color, the date it left the factory, etc.
A vehicle's digital ID will be key to all future applications. "In the future every car will have its digital identity on the blockchain with the manufacturer's number, the type of vehicle, color, the date it left the factory, etc.", explained Sébastien Henot. "Having this information on the blockchain will enable the development of an open ecosystem. Players such as Speedy and Carrefour will be able to offer services on this blockchain as soon as their key is approved. Any new players, once they're part of the ecosystem, could also add information on, for instance, repairs they have carried out. This type of approach only works if there's a standard and if these third parties are not obliged to work with one system for Renault, another for Peugeot, a third for Audi, and so on."
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This idea of a service manual stored on the blockchain is one of the projects that engineers and researchers at the French Institute for TechnologicalResearch (IRT) SystemX (Scientific Cooperation Foundation) are working on.The venture brings together a large ecosystem of French players, including automobile manufacturer PSA group (comprising the Peugeot, Citroën, DS,Opel and Vauxhall brands), French insurance firm Covéa and more recently IMA, a company that provides road assistance. Aldric Loyer, head of the electronic innovation and connected vehicles team at the PSA group, reveals: "When IRT SystemX approached us a little over two years ago and offered toto work with us on the blockchain, we were a bit mystified by the technology. So we went to our Information Systems Director, and it turned out that he had already identified it as potentially useful." In addition to the opportunity of working with researchers on state-of-the-art blockchain technology and building skills in this highly promising area for the auto industry, PSA saw a means of creating a consortium even before the existence of MOBI. "When you're talking about blockchain technology, you're talking about distributed infrastructure, where it’s really useful to create a consortium and work with all the partners in the ecosystem. What we find so useful about this consortium with IRT SystemX is that, while it may be smaller in terms of the number of participants, it encompasses a far wider range of sectors, including insurance, energy and logistics, which means we can work on use cases that go beyond the automotive sector", explains Aldric Loyer. When the consortium was setup, digitalizing the service manual seemed the most useful area to work on, because this will for example avoid any mistrust regarding the state of a second-hand car when a buyer is about to purchase it. A service manual stored on the blockchain cannot be falsified; it thus quells any doubts about the maintenance record of the vehicle, and it also allows easier sharing of the information among the various players in the sector.
Updating THE INSURANCE INDUSTRY
This was the major advantage in prospect that led Aldric Loyer to initiate the project with SystemX. He explains: "We had already digitalized the service manual on smartphones, but this is specific to PSA and can only be updated when the owner of the vehicle updates the information in the PSA network. The approach is too restrictive. Customers want a wider choice. Using blockchain technology means you can set up a shared system involving partners who may have very different interests, even competing interests. It’s a commitment to transparency and an across-the-board approach."
It was this way of working across silos that attracted the French mutual insurance company Covéa (which umbrellas the MAAF, MMA and GMFbrands), in particular with regard to vehicles that have been declared a write-off by experts following an accident. "Vehicles are sometimes put back on the road, and this has been known to lead to fatal accidents. It’s therefore vital to be able to trace vehicles that have been written off and ensure that they do not go back on the market", underlines Bruno Garçon, who heads up theblockchain project at Covée. He explains: "With blockchain technology we can certify the expert's report and then record the transfer of ownership of the vehicle to the insurer and, lastly, certify that the auto-wrecker has actually destroyed the vehicle." Just like its partner PSA, Covéa stresses the most useful aspect of the blockchain for players in the auto industry, the concept of an ecosystem. Garçon underlines: "From an insurer's point of view, we observe the world being digitalized but we're living in a world made up of silos where everyone keeps their data to themselves. We hope that we can make customers' lives easier, especially at the moment when they change vehicles. When a customer changes his/her vehicle and insurer, it’s an opportunity fo rus to create an ecosystem of different types of partners where we can both obtain information and offer services." However, a balance still needs to be maintained between transaction transparency on a blockchain and the need for data privacy in some areas. No manufacturer wants to see data relating toits vehicle breakdowns accessible to everyone on a public blockchain or even a consortium blockchain that is accessible to its competitors.
The first applications
Autonomous cars will create a boom in embedded blockchain installations
As things stand, the initial blockchain applications for cars are not particularly impressive. Basically, they add a blockchain layer to make existing applications more secure, or they digitalize existing documents. However, the innovation labs run by automotive manufacturers are already looking at far more ambitious, even futuristic, usage applications and scenarios. The view is that tomorrow's self-driving car will not only be driverless but will also be able to deal with parking arrangements and battery recharging. "We're only just scratching the surface of what we'll be able to do in the future, both in terms of customer experience and new business models", says Sébastien Henot, predicting: "The vehicles of tomorrow will be autonomous from a driving point of view, but shouldn't they also be economically autonomous? A car could make money by running errands during the day and could then spend its earnings in autonomous fashion – paying for tolls, parking spaces and battery recharging, and even negotiating with other vehicles so as to pass on an errand to a car that is closer or by buying the right to overtake another car!"
With an open blockchain, the tokens are actually on the blockchain and are public, so that any new entrant can accept them without necessarily having the auto manufacturer's authorization, if that's where it decides to start.
Sébastien Henot foresees that within a short space of time systems somewhat similar to the 'Airmiles' programmes run by airlines will be up and running on blockchains. The Renault Innovation Lab man's idea is to reward the driver of a car, but he argues that it will be necessary to go beyond the ideas Daimler outlined at the Mobile World Congress 2018, held in Barcelona in lateFebruary. The German carmaker presented MobiCoin, a cryptocurrency which rewards drivers for environmentally-friendly driving. The Airmiles equivalent Sébastien Henot has in mind goes far beyond this. He explains: "Unlike the Airmiles concept developed by airlines, the blockchain is an open system. In a closed system, the airline has to negotiate with all its partners regarding the use of the Airmiles it issues and you need resources to integrate all the computer systems. With an open blockchain, the tokens are actually on the blockchain and are public, so that any new entrant can accept them without necessarily having the auto manufacturer’s authorization, if that's where it decides to start." New entrants will be able to graft themselves on to this ecosystem at very low cost. Firms running public car parks or recharging stations and even mass retail companies will be able to accept tokens issued by an auto manufacturer so as to give their customers discounts or provides ervices.
Some experts believe that in the not-too-distant future electric vehicles will be fully incorporated into the SmartGrid electricity infrastructure, storing energy during the daytime, at a time when solar panels are at their most productive, then feeding it back to the power grid in the morning and evening, at a time of peak demand, with everything being run by blockchain technology. Others see cars as mobile relays for 5G, earning money through telecoms access, and soon. These are indeed imaginative notions but the technological progress is, for the moment at least, lagging behind.
The challenges to be met
Technology and business models both need to mature
Moving to the blockchain seems inevitable and we'll then be storing data for decades. There'Il be a cost for operating those blockchains. Who's going to pay for that?
Officially it was the mysterious Satoshi Nakamoto, who in 2008 invented blockchain technology. Smart Contracts only became part of the technology in2014. The technology has meanwhile demonstrated its resilience in the face of cyber-attacks, but to date it is not yet capable of meeting the very high technical requirements of the automobile industry. Aldric Loyer explains: "The blockchain hasn't yet reached technical maturity. We thought about using blockchain technology in the self-driving cars of the future in order to certify exactly when the vehicle is the automaker’s responsibility and exactly at what moment that responsibility passes to the driver. This application is constrained by the issue of real time, and the delay caused by the use of the blockchain doesn't solve the problem."
The current performance of the blockchain is in fact giving manufacturers a headache. Sébastien Henot has identified some of the limitations of the technology. "At the moment we're constrained by the volume of transactions per second. With Bitcoin a block of transactions is approved only every 12minutes; on Ethereum it's a block every thirty seconds. Players have promised to reach 10,000 transactions per second, but as yet that’s some way down the road and today we’re getting more like 50 transactions/second." These figures are certainly inadequate if you want to set up a complete supply chain on a blockchain or install blockchain applications in millions of vehicles.
Another hurdle to surmount is that business models to ensure blockchain sustainability need to be drawn up. "Moving to the blockchain seems inevitable and we'll then be storing data for decades. There'll be a cost for operating those blockchains", points out Aldric Loyer, asking rhetorically: "Who's going to pay for that? And what will their business model be?" For example, will car buyers pay for the blockchains or will automobile manufacturers launch InitialCoin Offerings (ICOs) to raise funds to finance these investments? Everything still needs inventing and there is a lot to be done before connected cars and, even more so, self-driving cars become inseparable from the blockchain. All auto makers have grasped this fact and are now working on the technology.