The Auto Industry Is Gearing Up for a Blockchain-Powered Future

We’re all excited for self-driving, even autonomous, cars, and many tout blockchain as the technology needed to make that happen.

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But while that conversation is an exciting one today, CoinDesk’s Consensus 2018 conference played host to an array of esoteric use cases for the mobility space that showcase how many executives in the automotive space are currently taking a more conservative approach to applying blockchain technology to the industry.

Sebastien Henot, manager of business innovation at Renault Innovation Silicon Valley, is such a pragmatist, opting for the low-hanging fruit of using the technology to better manage carmakers’ supply chains.

“Blockchain can bring cost savings to supply chains thanks to new levels of transparency and auditability, which would be of vital help in the unfortunate event of recalls,” Henot told CoinDesk.

And that process could also mark the birth of automobiles with their own unique digital identity.

“If you have an Audi and you want to sell it to buy a Renault, it would be very useful for the Renault dealer to be able to access the Audi birth certificate and see a standardized history,” Henot said.

But it’s still early days, and the process for what kind of data will be shared and how that data will be coded still needs to be standardized.

That’s one of the reasons the Mobi consortium, a kind of standards body for decentralized mobility and data sharing, was launched earlier this month with founding members including BMW, Ford, General Motors and Renault, as well as technology providers like IBM, ConsenSys and IOTA.

And while the futuristic use cases made possible by tokenized incentive structures is indeed what interests many members of the consortium, Henot said:

“My philosophy is let’s start small.”

Blocks of miles

According to Henot, starting with the little things, such as certifying the mileage on a car, highlights a very simple, yet beneficial proof-of-concept.

Odometer fraud, or “clocking,” whereby vehicle sellers or dealerships tweak the odometer to make it seem that the car has been driven less miles than it actually has, which can increase the value of a vehicle, is not a new problem (other blockchain-based startups have begun developing systems for just this use case).

In fact, around 450,000 vehicles are sold each year with falsified odometer readings, resulting in a cost of more than $1 billion annually, according to a National Highway Traffic Safety Administration study.

As such, Henot believes the blockchain could eliminate this issue around mileage, “so nobody can tamper with it.”

The team at UK-based Dovu, a startup part-owned by Jaguar Land Rover, agrees. The startup raised more than $13 million, according to current metrics, in a crypto token sale in October 2017, which it will use to incentivize users to behave in a virtuous manner, such as capturing mileage of their vehicles on a regular basis.

Dovu began a mileage capture pilot three months ago with BMW, which enlisted its employees to carry out the test using a simple Dovu-developed crypto wallet.

Explaining the benefits of the system, Dovu CEO and founder, Irfon Watkins told CoinDesk, “If, like BMW, you own a lot of cars under a fleet management arrangement, it’s really useful to know how many miles those cars are travelling every week or every month – rather than every three years.”

He added:

“By which time you might find you have an asset on your books worth a lot less than you thought.”

Crypto for the environment

Another small step the automotive industry could take to harness the power of blockchain revolves around electric cars.

Dovu is at the forefront of this application as well, using its token as a way to nudge drivers to charge their battery in an optimum way, “that doesn’t degrade the battery, as if it were a mobile phone,” said Watkins.

This use case could potentially push blockchain technology into the mainstream narrative, since so many people, especially millennials, are interested in electric cars for their positive environmental impact.

Spherity, a startup founded by a former technology innovation lead at the largest German utility company, Innogy, is also looking at applying blockchain to electric vehicle charging. The company wants to use the technology to provide an audit trail for “greenhouse gas accounting,” so users can trust their vehicles are using green energy (hydroelectric, wind farmed or solar) as opposed to energy generated by burning coal.

Just like people might want to track and trace sustainably-produced food from farm to fork, so too will environmentally-conscious users want a “guarantee of origin” on the electricity their car is using, Spherity founder Dr. Carsten Stocker said.

He added:

“Someone who spends $150,000 to buy a Tesla would probably like to have proof they are charging with green energy.”

More than just cars

Still, even while some are starting small, many are fascinated by the future as imagined with blockchain.

For instance, Henot said the future of mobility is not only about making vehicles physically autonomous but also economically autonomous, whereby automobiles “speak together, negotiate rights of way, parking and so on, using their wallets.”

One such group working towards those cutting-edge applications is the non-profit foundation, Decentralized Autonomous Vehicles (DAV), which describes itself as “the TCP/IP of connected mobility.” But according to John Frazer, a co-founder of DAV, one of the reasons the foundation is able to inspire such excitement is because it doesn’t think about autonomous vehicles only as cars and trucks.

“There are many other examples such as autonomous drones, autonomous rovers (a drone that stays on the ground) and autonomous marine vehicles – some are already here, the rest are coming,” Frazer said.

Among its notable advisers are the former CTO of General Motors, Dr. Alan Messer, as well as the technical lead on the Ethereum virtual machine, Dr. Greg Colvin.

Similar to Mobi, DAV is proposing a commons, a standard of sorts, in the form of a free and open-source decentralized mobility network.

And with this, the foundation hopes to see the full potential of blockchain bring about social change within the mobility industry.

According to Frazer:

“Big players are controlling a lot of what is going on right now, but as new and open networks roll out, the silos will be shared and the gatekeepers will become irrelevant.”

Here at Dollar Destruction, we endeavor to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

Author: Ian Allison
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Ford CEO’s Cost-Cutting Strategy in Focus During Earnings Slump

Auto maker is ‘burning a lot of cash in a lot of places,’ says one analyst

Ford Motor Co. Chief Executive Jim Hackett spent his first year in the job hammering away on the need to cut costs, aiming to slash $14 billion by 2020 and prodding its 202,000 employees to get more financially “fit.”

When Mr. Hackett took the post in May, he sought to jump-start Ford’s response to a rapidly changing business in which auto makers are increasingly focusing on electric cars and autonomous vehicles. To find the money to finance such projects, the new CEO had to look for savings. Analysts are expecting to see more details on cost cuts when the No. 2 U.S. auto maker reports quarterly results Wednesday after the closing bell.

Mr. Hackett is running a company with an operating margin below that of both General Motors Co. and the smaller Fiat Chrysler Automobiles NV in the fourth quarter. Ford’s annual 5% operating margin trails GM’s 9%, and is lower than its internal long-term target of 8%.

First-quarter earnings highlight a shift in the Motor City. Ford emerged from the financial crisis as the healthiest U.S. auto maker and held that crown for several years. Today, however, Ford’s market value of $43.2 billion is closer to Fiat Chrysler’s valuation than GM’s, a trend that has sharply accelerated since Mr. Hackett took the helm.

Mr. Hackett needs to address Ford’s spending habits. In the critical area of engineering, research and development, Ford’s $8 billion budget last year outpaced GM’s by nearly 10%, even though GM sells far more cars globally and has more advanced electric cars. In addition, Ford also dished out more to cover warranties and materials. And Ford’s overall head count increased in 2017.

“They are burning a lot of cash in a lot of places,” said Rod Lache, an auto analyst with Deutsche Bank Securities. Ford’s automotive operating cash flow slipped 40% last year, and the company’s annual profits are projected by Wall Street analysts to drop 12% in 2018, even though first-quarter earnings are expected to increase.

Mr. Lache, who expects Mr. Hackett to elaborate on his restructuring plan during the earnings call this week, said GM and Fiat Chrysler have been far more decisive in exiting money-losing parts of the business, such as unprofitable car lines or geographic markets that return little or no profit.

“Ford really never went through this,” Mr. Lache said. “That’s ultimately come home to roost.”

Sinking more money into engineering cars with pricier materials, engines and features has helped Ford better meet fuel-economy targets and boost transaction prices of profitable trucks. But the Lincoln lineup and certain passenger-car lines can require steep discounts that erode or erase margins.

Mr. Lache estimates 60% of the volume delivered in the U.S. was sold at a price below the industry average.

Mr. Hackhttett plans to shift about $7 billion in spending away from small cars and sedans and move it toward development of more profitable trucks and sport-utility vehicles. He also is increasing investment in electric, autonomous and internet-connected cars.

If he succeeds, Mr. Hackett could polish Ford’s image and brighten the investment case. The road ahead, however, will be bumpy.

Ford’s own outlook for 2018 calls for a third consecutive year of earnings decline. Operations in South America and India are losing money, and sales in China slid 19% in the first quarter, a decline that could further pressure earnings.


“There won’t be much to get excited about with the Ford story until 2019, or perhaps 2020,” Brian Johnson, a Barclays analyst, wrote in a recent research note.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

Author: Christina Rogers
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