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1. Executive summary01
2. Auto disruption and the role of blockchain02
3. Practical applications of blockchain within automotive 06
4. Assessing blockchain opportunities 10
5. Responding to blockchain 12
6. Annex: Assessment framework and method14
7. Contacts17
8. Endnotes18
In this publication, references to Deloitte are references to Deloitte LLP, the UK affiliate of Deloitte NWE LLP,
a member firm of Deloitte Touche Tohmatsu Limited.
Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
1. Executive summary
The automotive market of the future will be starkly complex (and costly) to implement. Although they will
different from that of today. It will need to be more provide value for businesses and have potential to
integrated and offer on-demand and personalised generate further benefit, at the most basic level they
services that will include autonomous, shared and may not be worth heavily investing in yet. Blockchain
connected cars. Blockchain has the potential to play opportunities in this segment relate to insurance contracts,
a major role in underpinning the industry and provenance or trace and verification of parts.
transformation that is coming.
4. Transformative
Blockchain is the technology that underpins bitcoin These offer the most attractive opportunities in terms
and other cryptocurrencies but is also much more of potential value. However, they are heavily influenced
than that. There are many opportunities to use by external factors and also considered the highest
blockchain across the automotive industry that risk option. Blockchain opportunities in this segment
can transform products, services and processes. It relate to connected services, connected supply chain
provides an innovative approach to managing data and and ride sharing, and on-demand mobility services.
executing transactions where accuracy and reliability is
paramount, car financing being just one example. We expect a tipping point within the next five years,
due to the combined impact of changes in automotive
Our discussions with executives across the industry ownership and sales models, and greater understanding
reveal that many businesses are keen to understand and adoption of blockchain. The result will be
and apply blockchain but are unsure of where to start. wholesale adoption of blockchain following a period
Our analysis aims to help shape this understanding so of trials and pilots.
businesses can develop the most appropriate approach.
Interest will grow over the next two to three years as
We have evaluated blockchain opportunities across
more businesses explore blockchain opportunities. This
the automotive value chain, analysing characteristics
interest will develop into detailed enterprise strategies
that could be used to resolve a number of business
and implementation of blockchain prototypes. The
issues. We have grouped our results into the following:
more advanced businesses will be focused on how to
scale up the opportunities they have identified.
1. Trial projects
These opportunities have a lower immediate value
The rationale and value of investing in blockchain
relative to others due to a narrower blockchain
will depend on a company’s overarching strategic
application. However, they are attractive as they are
objectives as well as its capacity and capabilities.
less complex to implement than other opportunities.
However, those who do not consider the impact are at
Blockchain opportunities in this segment relate to
risk of falling behind. Those who are more proactive
odometer fraud, electric vehicle payments, and dealer
and customer incentives. will have the ability to take earlier advantage in
generating value for their business.
2. Investigate
These are more attractive opportunities relative to Organisations will need to assess which blockchain
trial projects in terms of value but are similar in capabilities and opportunities are most suitable for
complexity (and cost), offering greater value relative to them, as well as where, how and how much to invest.
investment in the short-term. Blockchain opportunities For some, this will include a strategic assessment to
in this segment relate to targeted recall, extended explore opportunities. For others, it will be about
vehicle ledger, know your supplier, and auto leasing enhancing existing blockchain capabilities to achieve
and finance contracts. further value, alongside other technologies.
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
In addition, executives in the consumer products Indeed, some organisations are already seeing
and manufacturing industries (which encompass the potential use and benefits of blockchain
automotive) expressed the most bullish blockchain technology to solve complex problems and generate
outlook, with 42 per cent planning investment of at new opportunities. There are also a number of
least $5 million in the coming year. partnerships being formed to develop new use cases
across the industry.
42 per cent in the
coming year
of executives relates to the concept and benefits
at a broad level, rather than specific and detailed
are planning
understanding of which applications would be most
investment
of at least relevant and valuable to their business.
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
The rationale for blockchain across the Further inefficiencies exist in the current industry
automotive industry is considerable… with vehicles being underutilised and expensive
Our broader research relating to the future of mobility, to own. Cars are parked (and inactive) 95 per cent of
digital transformation, the automotive consumer and the time yet vehicle owners incur ongoing fixed costs
other key trends affecting the industry suggest there such as insurance, tax, maintenance and parking.5
are blockchain opportunities across the value chain.4
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
3. Practical applications of
blockchain within automotive
As previously outlined, there are a number of use •• Finance, payments and insurance – to improve
cases in the automotive sector. The analysis in this transactions processes and information relating to this.
report is based a selection of twelve use case groups.
Figure 4 shows an example of the hierarchy of
The use case groups were developed from an initial categories relating to use cases that are referred to
analysis of over 40 use cases which were short-listed in this report. Individual use cases are not assessed
and combined to cover the breadth of the automotive separately in this report but have been assessed as
market and blockchain applications. Each use case part of a use case group. Please see the annex for
group may cover a range of individual use cases. further details of these categories, how they relate
to the broader context and the method used in this
The use case groups have also been allocated to a analysis.
'use case purpose' depending on the reason for the
blockchain application. The three 'use case purpose' In practice, individual use cases and use case groups
categories are: may be combined. For the purpose of this analysis,
we have assessed use case groups as defined in this
•• Verification and process improvements – to chapter.
improve process efficiencies across the supply chain
and back office. Figures 5 to 7 provide descriptions of each of the
twelve use case groups assessed in this report.
•• Vehicle management and incentives – to An example of a pilot or prototype is also provided
improve vehicle information and usage data across for context but it should be noted that a variety of
the industry. examples exist.
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
Figure 5. Automotive use case groups to support verification and process improvements
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
Figure 6. Automotive use case groups to support vehicle management and incentives
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
4. Assessing blockchain
opportunities
Our analysis is aimed at identifying where, in both the Assessing blockchain’s complexity
traditional and future automotive industry, blockchain The complexity criteria are based on the level of
could have the greatest impact. business change required, unique participants and
active participants (volume), the number of services
Blockchain’s value – based on business benefits and whether the use case has been tested before.
The criteria used to assess the value to business of the
blockchain opportunities are based on the Deloitte The potential range for complexity or ease of
Enterprise Value Map. This is a tool which identifies implementation of the blockchain use cases is shown
factors stimulating business growth. The criteria in Figure 8. A position further to the right represents a
include factors that support organisational growth more complex implementation and adoption process.
through:
Strategic choices will affect the attractiveness of
•• strong revenue growth –including factors that use cases
support volume and price Our analysis has not considered use cases of
‘low value’. Therefore, depending on the strategic
•• better operating margins – including factors that objectives of the business, there are four segments
support the selling and administrative side as well as of impact:
cost of goods sold
1. Trial projects
•• improved asset efficiency – including the These opportunities are attractive as they are less
effectiveness of property, plant and equipment as complex to implement than other opportunities.
well as inventory However, the immediate value is lower relative to
others due to a narrower focus of the blockchain
•• expectations – including factors that affect application. These include blockchain opportunities
company strengths and perceptions. relating to odometer fraud, electric vehicle payments
and dealer and customer incentives. Businesses
Within the Deloitte Enterprise Value Map there are that are exploring blockchain opportunities could
over 500 strategic and tactical elements that can consider these as a starting point, if relevant to their
influence these criteria and thus affect business organisation, and expand them to obtain more value
growth. Examples of the more granular elements in future.
include improvement of incentives in relation to
procurement efficiency and developing a 2. Investigate
stronger brand. These opportunities are more attractive relative to
the trial projects in terms of value yet have similar
For each strategic and tactical element, a score was levels of complexity, offering greater value relative
assigned based on whether the use case would be to investment in the short-term. These include
relevant and whether it would help solve a problem blockchain opportunities relating to targeted recall,
inherent in the industry or organisation. Consideration extended vehicle ledger, know your supplier and
was also given to whether or not the blockchain use auto leasing and finance contracts. Again, businesses
case would be the most appropriate solution. that are exploring blockchain opportunities
could consider these as a starting point, if relevant
The resultant range of values for the blockchain to their organisation.
use cases is shown in Figure 8. A higher position
represents a higher value.
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
Investigate Transformative
Ride sharing and on-demand
mobility services
Targeted
recall
Connected supply chain
Know your
Auto leasing and finance contracts supplier
Value
Connected services
Insurance contracts
Complexity
Verification and process improvements Vehicle management and incentives Finance, insurance and payments
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
5. Responding to blockchain
However, the rapid pace of improvements in Reviewing the potential impact – responding to
blockchain technology mean that, within one to two the opportunity and disruptive trends
years, blockchain could provide a solution to many of The potential impact of individual blockchain
the challenges faced by the industry today. opportunities may vary within each use case group.
The potential value and complexity are also likely to
Indeed, blockchain could replace processes within vary as the automotive landscape changes due to
this timeframe. For example, work programmes that factors such as new competition, compliance changes,
last more than two years may be inherently outdated Brexit and other disruptive factors.
before they are even implemented.
For instance, in future, with increased vehicle
We expect the tipping point to be within the next five autonomy and sharing, the asset efficiency of vehicles
years, at which point we expect wholesale adoption will increase (in terms of hours per day) resulting
across the industry. in more miles per year per vehicle. This will place
more emphasis on maintenance of parts and vehicle
refurbishment. In turn, blockchain use cases related to
this – such as ‘Provenance/trace and verify parts’ will
generate more value than offered today.
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
•• Are there any projects that could be replaced or Businesses that do not consider how blockchain may
enhanced by blockchain technology? impact their operations are at risk of falling behind
and losing out on potential growth opportunities
offered by blockchain.
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
6. Annex: Assessment
framework and method
The framework below was
developed to guide the analysis
of use cases, taking into account
Disruptive trends
the complexity and multiple
applications of blockchain as well
as the changing dynamics of the Customers New retail
auto industry. personalised concepts
experience
Traditional model
Fleet operator
Dealer/retailer
Consumer
After-market
Scrappage
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
Future dynamics
Direct to consumer
Customer
Future of mobility
Manufacturers
Blockchain services
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
Use cases selected to cover breadth of Change in traditional model to a new dynamic,
automotive market and range of blockchain consumer-led industry
services The framework illustrates the shift in the way the
The framework and approach developed for this industry operates. The linear model of the vehicle
paper is based on an extensive review of examples purchase and ownership lifecycle is becoming more
of blockchain technology in the automotive market dynamic and customer-led.
as well as discussions with sector experts and
Deloitte analysis. Disruptive trends are having a significant impact on
the way the industry operates as outlined in chapter 2.
An initial assessment of over 40 use cases was
completed before short-listing and combining into the Some of these trends are depicted at the top of the
selected twelve use case groups. framework. Collectively, these trends could influence
the value and uptake of a given use case as discussed
The use cases are also described in more detail in in Chapter 5.
chapter 3.
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
7. Contacts
Author
Thushani Lawson
Insight Senior Manager,
Automotive and
Industrial Products, Deloitte
thlawson@deloitte.co.uk
+44 20 7007 8733
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
8. Endnotes
1. See: https://www2.deloitte.com/us/en/pages/manufacturing/topics/automotive.html?icid=nav2_automotive.
https://www2.deloitte.com/uk/en/pages/innovation/articles/blockchain.html
2. Blockchain @ Auto Finance – How blockchain can enable the Future of Mobility, Blockchain Institute, Deloitte, 2017.
3. Beyond bitcoin: Blockchain is coming to disrupt your industry, Deloitte University Press, 2015.
See: https://www2.deloitte.com/insights/us/en/focus/signals-for-strategists/trends-blockchain-bitcoin-security-transparency.html
4. See: https://www2.deloitte.com/insights/us/en/focus/future-of-mobility/roadmap-for-future-of-urban-mobility.html
5. See: http://fortune.com/2016/03/13/cars-parked-95-percent-of-time/
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
Notes
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Accelerating technology disruption in the automotive market |
Blockchain in the automotive industry
Notes
20
This publication has been written in general terms and we recommend that you obtain professional
advice before acting or refraining from action on any of the contents of this publication. Deloitte LLP
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