Will centralised OEMs survive blockchain driven decentralisation?

Will centralised OEMs survive blockchain driven decentralisation?

Guest post by Dovu, a company which has created a unique open-source cryptocurrency to enable seamless transaction of data between consumers and mobility services.

As car ownership is declining, the consensus in the automotive industry is that vehicle utilisation needs to increase above its current 5% rate. As traditional mobility companies are looking for new revenue streams, there is a new class of startups emerging, eager to leave their footprint on the transport sector: blockchain companies.

Blockchain Service Design Principles

 Traditional Mobility ServicesBlockchain Mobility Services
Value attributionShareholdersStakeholders
Ultimate goalIncreasing corporate profitIncreasing token utility
Business ModelCentralisedDecentralised

The concept of ownership and central entities shall be replaced by the concept of stakeholders and a well thought through decentralised system, in which individuals co-create the value of the network. Value attribution is recorded on the blockchain, creating the unique opportunity to reward co-creators for their contribution.In the blockchain model there is no central controlling company, but shared contributions and ownership by all involved.

So how is contribution rewarded? Blockchain uniquely rewards early adopters via tokens.

In a transaction context tokens are used as the main method of exchanging value. Secondly, contributing to the quality of the ecosystem is rewarded, introducing a self-reinforcing feedback loop. Token utilisation and network effects continuously reinforce each other which benefits early adopters.

Traditional Mobility Services

Let’s take Uber as an example:

  1. Uber is a centrally organised entity, with the corporation being the ultimate decision maker.
  2. The rewards of the value created by all platform participants (e.g. drivers, passengers, support staff, and other employees) mainly flows to shareholders, with platform participants receiving a disproportionately small share (in form of salary).
  3. With network effects Uber’s utility (decreased waiting times) and utilisation (more trips) increases, ultimately increasing its profits.

Blockchain Mobility Services

Applying decentralisation principles to the mobility sector unlocks many new services.

Similar to the introduction of the internet, greater access to data opens the way to better decision making. By incentivising owners of existing datasets via token payments to make this information open, increased data flows spurs new business models.

Empowering vehicle owners to monetize their assets by selling rides, cargo space or even the use of the vehicle itself; fractional ownership of cars; permitting insurers to make better decisions and drive down the cost of travelling for responsible individuals; allowing transport providers to price more accurately, so that it’s cheaper to travel when fewer people are using the networks; and much more.

More intense usage of these mobility services, or higher token utilisation, increases the value of the token, further rewarding early adopters, ultimately introducing a circular economy.

What will this mean for car companies?

Over the next ten years, how will traditional OEMs stay relevant?

First of all, people will still need actual vehicles to move around in.

Leveraging these physical assets is not the only leverage OEMs have at their disposal. Equipped with years of know-how in R&D and car design, traditional car companies are the authority on how to extract data from the various sensors and systems within the car. Data mobility services need to optimally run their operations.

Last but not least, established car brands (should) inspire trust. Trust is critical for mass adoption of new mobility solutions.

Seamless mobility significantly improves quality of life, and it is in everybody’s interest we get there as fast as we can. Car companies are an important contributor to that journey.

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