May 22, 2017 — Imagine a world where automotive vehicles are no longer depreciating assets, but are profit generating machines.
That world may be here much sooner than we think. Automakers are beginning to explore blockchain, a new and disruptive technology that may prove to be critical to the creation of a mobile ecosystem where autonomous and connected vehicles are the norms.
A blockchain is a ledger of lists or blocks of data transactions that constantly grows as new transactions or data sets are added. Each block or transaction is connected to the previous block thus creating a chain of data. The lists are immutable, meaning, once a transaction is recorded, it cannot be changed or altered.
Chris Ballinger, the CFO and head of mobility services for the Toyota Research Institute (TRI), says the technology will “be incredibly disruptive to automotive.” Blockchain has already disrupted the financial industry and is doing the same in healthcare.
Automotive is next.
While it’s too early in the process for actual monetization, TRI is on the forefront developing proofs of concept for the auto and technology industries showing how blockchain will help drive faster adoption of autonomous technology.
Although Ballinger has a big vision for how automotive will benefit from blockchain technology, TRI is starting with projects in three areas:
- Driving/testing data sharing
- Car/ride share transactions
- Usage-based insurance.
As part of its strategy, TRI announced yesterday during the Consensus 2017 event this week in New York, that it is working with MIT Media Lab to put together a consortium of several tech firms to speed the development and use of blockchain solutions.
“Blockchains and distributed ledgers may enable pooling data from vehicle owners, fleet managers, and manufacturers to shorten the time for reaching this goal, thereby bringing forward the safety, efficiency and convenience benefits of autonomous driving technology,” Ballinger says in the press release announcing the initiatives.
“We are trying to be transparent and open, because we can’t build it by ourselves,” he tells TBR in an interview last week.
One such partner is Gem, a Los Angeles-based firm with expertise in blockchain technology. It is working with Toyota Insurance Management Solutions (TIMS) – Toyota’s joint venture telematics car insurance company created last year with Aioi Nissay Dowa Insurance Services — to build a usage-based insurance platform.
Micah Winkelspecht, Gem’s founder and CEO, says sensor data from vehicles is becoming more prevalent along with driving behavioral data. “But the industry lacks the tools to bring that data to a point where it’s usable,” he says.
Gem is building the ledger or blockchain that will collect the driving and telematics data. Using that data, insurance firms will be able to provide their customers with the opportunity to reduce insurance costs through a usage-based pricing system.
In addition to lower insurance costs, a usage-based system could save lives. “It’s creating an incentive for people to drive more safely,” Ballinger says.
Other TRI partners and projects include:
- BigchainDB: Building the data exchange for sharing driving and autonomous vehicle testing data;
- Oaken Innovations: Developing an application for P2P car sharing, vehicle access and payments with a new mobility token
- Commuterz: Working with TRI on a P2P carpooling solution.
Ballinger’s overall vision is much more comprehensive, though, and that may push Toyota ahead of other automakers in leveraging blockchain.
Two other automakers have recently made moves to learn more about the technology but are still only in the early learning stages.
Daimler AG joined the Hyperledger Project in March, a consortium of more than 100 companies, after acquiring a digital micropayments company called PayCashEurope earlier this year.
Meanwhile, Porsche announced a competition in April for start up firms working with blockchain technology.
TRI seems to have the strategy and roadmap in place. Now it is focused on building the technology and solutions with partners.
While at Toyota Financial Services, Ballinger began to see how blockchain was taking friction out of transactions in the financial services space. But his real interest was in what could be done in mobility leveraging blockchain technology.
“It turns out, quite a bit can be done,” he says. He envisions a world where Toyota is able to monetize all of the data coming from the vehicle. As a result, he believes Toyota can turn the vehicle into a profit center rather than a depreciating asset.
In the near future, every vehicle coming off a production line could have a digital ID streaming data to various blockchains. Later it’s possible that every component on the vehicle will have its own digital ID streaming its own data.
That changes the game on just about every level. Vehicles, which are being used only 4% of the time today, will be able to have multiple uses, generating income from trunk sharing, ride sharing or renting, Ballinger envisions.
It will also change the used vehicle industry and how firms determine residual values for vehicles.
Winkelspecht says the challenge is in harnessing that data. “There is a huge gap in communication today and how to use that data,” he says. “We’re generating more data in 2017 than was generated in the previous 5,000 years.”
But as firms such as Gem turn their attention to the auto industry and work with automakers like Toyota building out a collaborative data ecosystem in which unlimited companies and services can share, the adoption will begin moving at lightning speed.