Blockchain technology has come a long way, from its humble beginnings in 2009 to its rise to the spotlight in recent years. While the emerging technology has fallen behind artificial intelligence (AI) in recent years, blockchain use cases in the automotive sector are poised to reach new highs.
According to a report from Global Market Insights, the automotive blockchain industry could see a significant increase in market capitalization amid rising adoption rates and technological advancements.
In 2023, the sector is valued at just over $550 million, but due to a combination of several factors, the market is expected to grow to $4.1 billion by 2032. The giant leap translates into a compound annual growth rate (CAGR) of 25% from 2023 over an eight-year period, supported by a range of market trends.
According to the report, use cases around improving supply chain efficiency are touted to increase the industry’s market size. Early adopters rely on blockchain for “real-time tracking and vehicle authentication,” guaranteeing the provenance of parts to prevent counterfeits.
One use case involves German automaker BMW (NASDAQ: BMWYY) using blockchain to track the cobalt in the batteries of its electric vehicles from mining to final application. In 2019, a company report revealed that blockchain’s inherent features of transparency and immutability have contributed in no small part to ensuring compliance and “building stakeholder trust.”
Toyota (NASDAQ:TM) has since joined the fray by tracking spare parts using blockchain, achieving relative success and laying the foundation for advanced supply chain applications in the future. The report predicts a spike in the use of smart contracts in the industry to eliminate third parties in transactions while improving speed and transparency.
“These smart contracts minimize administrative costs and increase transaction speed and transparency by automating payment settlements according to preset parameters,” the report said.
According to the report, the mobility segment is expected to be the biggest driver of the peak, with commercial mobility leading the way. Recent developments in smart city projects could see the mobility segment contribute as much as $2 billion before the end of 2032.
Skewed regional distribution
The report indicates that North America, especially the US, has a clear lead in the sector, with a market share of almost 35%. The region’s lead appears justified given its steady capital injections from a pool of institutional investors, progressive policies and support from regulators compared to other regions.
Outside of North America, Asia comes in second, supported by the Chinese auto industry’s advances in supply chain and reliance on smart contracts. Japan is also on the same path with Toyota, Honda (NASDAQ: HMC) and Nissan (NASDAQ: NSANY) contributing to the growth of the ecosystem.
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