Yesterday I talked about how the blockchain can underpin shifts in the car industry. As I mentioned, most of the utility revolves around the handling of data. Let’s look at that some more, because I believe it’s a much bigger use case than most realize, and one which will generate entirely new business models. What’s more, I don’t think it’s optional.
A report issued last year by McKinsey valued the annual revenue opportunity in car data by 2030 at between $450m and $750m. (I tend to not trust value figures given in reports like this as the variables used are subjective at best, but it serves to show that we’re talking about a lot.) Another McKinsey report highlighted that data collection will become a key focus of the automotive sector over the next few years.
I believe that the change will be deeper than that – driverless cars will do to the car industry what smartphones did to the telecommunications sector. The main function is still there, but the additional services blur business boundaries and move a large part of the value to the peripheral service providers.
Here is a list of just some of the services that autonomous car data can fuel:
- Toll payments
- Usage-based insurance
- Car cleaning
- Shopping pick-up
Bear in mind that the car companies can provide some of these, but most will end up being offered by tech or financial startups, or even innovative incumbents.
Toll payments is a particularly interesting use case, given that it could transform the financing of public roads. And it points to an entirely new, autonomous, data-driven business model.
In the current system, the user/driver pays the toll. But what if the car itself paid the toll, from its account that gets topped up when individuals pay to ride in it?
Each driverless car could become a self-sustaining business. Income would come not only from usage, but also from the “selling” of the data each car generates. For instance, a vehicle tootling around a city could earn 1 ether for each GB of data transmitted to municipal sensors. The local government could use that information to optimize its expenditure on road maintenance, garbage collection and other services.
Or, a municipality could use the data to calculate tariffs on roadside billboards, charging advertisers according to the number of cars that drive by (much like advertisers pay according to traffic on websites).
Vehicles could also earn income through in-car advertising. This could subsidize or even pay for in-car entertainment, which itself generates data that would be of value to content producers and lifestyle companies.
Autonomous cars will effectively be an extension of our mobile phone, something both Apple and Google are very aware of. After all, what will we do in the driverless car as we are ferried to our destination? Pretty much the same stuff we currently do on our smartphone: talk to friends or colleagues, listen to music, watch a video, check the news…
So, it makes sense that an account on our smartphone pays for our automobile use, automatically and according to how many kilometers we travelled. We hop in, press the sign-in button on the dashboard (which then connects the car to our phone), and sign out before we hop off.
Here’s where blockchain technology becomes an essential platform: the colossal sharing of data between our phones, the cars, the municipality and the related services.
Under today’s system, the sharing of data is possible but complicated, with permissions, APIs and security measures adding layers of friction and risk.
On a blockchain platform, access can be on a selective, needs-driven basis. Ownership can be shared when desired, and validity can be trusted in a frictionless, secure and flexible ecosystem.
Surprisingly, according to the McKinsey survey, privacy doesn’t seem to be a big issue. 88% of consumers were comfortable openly sharing their data with third parties. Interestingly, the figure went up to 93% in China, the country in which over three quarters of respondents would switch to a driverless car if no additional cost were involved.
The report does highlight the changing perception of data – that it can be used to pay for things.
“Data connectivity will generate a vast set of benefits that customers will likely want to pursue, leveraging their personal data as “currency.” The value represented by this “currency” is already significant and expected to grow rapidly over the years to come.”
While the survey focuses on the smart cars in production today, the findings are even more relevant to the autonomous cars of tomorrow.
Blockchain’s main innovation is a new way of handling information. So it’s not hard to see how, in an emerging sector that both generates and depends on data, the technology evolves from being a luxury to a necessity. Without it, friction will persist, inefficiencies will keep costs high and adoption will have to overcome even more obstacles.
With the development of resilient blockchain platforms that underlie the new services and business models, the rollout of autonomous cars will trigger a wave of further innovation and growth, based on the fluid and efficient handling of information. And metaphors referring to data as the “new oil” become even more appropriate and relevant.