What do you think of when you picture the automobile industry?
Likely the images conjured are of fast cars, classic collectibles, and even factories where workers churn out millions of vehicles every year. It is an industry steeped in innovation, and one that denotes freedom — the ability to drive wherever you want to, even on a whim.
But it may surprise you that this industry, which is over a hundred years old, has started to reinvent itself. And that retransformation is occurring right in front of our eyes in the wild world of non-fungible tokens.
So, how is the automotive industry using NFTs?
This guide has the answer. After reading it, you’ll be well-verse in the mesh between the exciting car industry and this nascent technology space. We cover:
- How car companies are using NFTs to change customer relationships
- The unique car-NFT pairing
- The industrial metaverse and NFT use in automotive supply chains
- And the future, where NFTs could be used to combat used car fraud
Ready? Let’s dive in.
Changing Customer Relationships with Brand
Let’s start with the basics: The NFT collection, often comprised of what companies are now calling “digital collectibles.” On the blockchain, these NFTs provide an immutable link between a collector and a brand, transforming the previous transactional relationship most customers had with companies they like.
Here’s an example.
About 10 months, Porsche released an NFT collection. There were 7,500 tokens that celebrated the 911 car, which it calls the identity of the Porsche brand since 1963. There was an interactive component: Holders started with a white Porsche 911 Carrera, but could change its appearance by choosing one of three tracks. The NFTs became personal.
And it didn’t stop there.
Porsche’s NFT collection was an “entrance to the Porsche Web3 community,” which the company called the PIONΞERS CIRCLE. In effect, holders of Porsche NFTs would work side-by-side with the car company to form its Web3 strategy.
There would be other perks as well, including virtual and real-world experiences. The goal was to create a dialogue between Porsche enthusiasts and the company.
Porsche wanted to change the relationship between fans and the brand itself. And it would do so through non-fungible tokens, the building of a digital community, and a combination of art, communication, and engagement.
Porsche is not alone in this attempt. Other car companies who are trying something similar include:
- Mercedes Benz
Why is this important?
Companies used to build their brands through advertisements: television, radio, social media. These advertisements were one-way streets. The company created them and the end-user interacted with them.
Now, car companies are trying to interact directly with consumers — forming long-lasting bonds that can benefit both parties. At least, that’s the idea.
NFTs provide a pathway for a new kind of relationship between enthusiasts and brands, one that could turn traditional marketing methods on its head. In the future, will Web3 denizens be able to influence the paths of big companies?
Maybe only time will tell, but certainly this is the beginning of something new.
The NFT-Car Pairing
Car companies are creative, especially the luxury brands, and their creativity has translated nicely into the NFT space. Take the case of Rolls-Royce.
In late 2022, the United Kingdom-based car manufacturer rolled out its “Six Elements” auto series: a set of six personalized Phantom cars, which the company describes as “the apex of luxury.” The name plays on the five elements of nature (earth, water, fire, wind, and air) and the sixth element of humanity.
But there was one addition to the project that came as a surprise: Buyers who purchased a Phantom in this series would receive a 1/1 NFT art piece from renowned British artist Sacha Jafri. Not coincidentally, Jafri’s best-known work is “The Journey of Humanity,” hence the sixth element in the series.
Rolls-Royce put a final interesting twist on the concept. Calling the set of cars “The Rolls-Royce That Keeps on Giving,” the company programmed the smart contract of the accompanying NFTs to send the secondary royalties to charity. In perpetuity. All told, the car company raised over $1 million for charities, with that number possibly still rising.
It was a mesh between technology, craftsmanship, and art, all done for a good cause. And it’s not the only company that has paired NFTs with its cars. Alfa Romeo (which we’ll cover later) has done the same.
In the case of Rolls-Royce, the NFT was used to augment the buying experience. We’ve seen something similar in other industries, where companies pair NFTs with their products, typically digital twins that can be used in the metaverse.
Will we see a future where regular car companies like Ford and Nissan attach NFTs to their vehicles for the average person?
It is not only possible, but perhaps likely. The reason is further down in this guide, when we look into the future of how the automotive industry may use NFTs, and why this new technology could create a great deal of disruption.
‘Storytelling NFTs’: Car Companies Re-Establish Their Histories
Storytelling NFTs was a moniker that came from the Tally Labs team in 2022, and one that was widely panned. But car companies are taking that in a new direction: Using NFTs to convey their culture and history with younger, technology-savvy audiences.
Take the story of Lamborghini.
In January of 2022, the luxury car company created its first NFT collection: “The Space Key.” It involved a set of tokens with unique space-related artwork, and those tokens involved something physical — a piece of carbon fiber that the company had sent to space in 2019.
Of course, there was the branding: The project was “proof of” the company “always setting sail for new horizons,” said Stephan Winkelmann, Chairman and CEO of Lamborghini, at the time of the announcement.
Later, it would create another NFT collection called “The Epic Road Trip” where holders would partake in experiences that only Lamborghini could offer.
Other car companies are following suit. They are telling their stories, like the history of their companies, to this new audience who may not be familiar with them. It’s direct marketing using non-fungible tokens — a way to establish a connection with their consumers while they are still young. It is part of a Web3 landgrab, a staking of a claim to an audience made up of mostly 20- and 30-year-olds.
But, aside from the obvious benefits to the company, these collections show the power of NFTs. In the right hands, they can weave stories, becoming more than simple tokens on the blockchain and part of something altogether bolder and better.
The NFT space is still in its infancy, but in 10-15 years, the technology may be widespread. And these stories will linger in the culture. It is yet another use for a nascent tech that could change the world, and some car companies see the potential now.
We believe more will see it soon.
NFTs in Automotive Supply Chains
Now, we change course from the NFT collections on secondary marketplaces, the minting, the marketing. Here, we head to the nitty gritty of the companies themselves, to the inner workings of how cars are made, to the use of non-fungible tokens in automotive supply chains.
First, a primer: Supply chains are the process by which a group of individuals or companies take raw materials, turn it into a product, and deliver it to a customer. They are a key part of business, and supply chain management is critical. An inefficient supply chain can cause significant financial losses and result in a business failing.
Part of the problem with supply chains is the number of moving parts. Sometimes things get delayed. Sometimes things get lost. And that is where NFTs come in.
Using non-fungible tokens as part of a supply chain is a new and evolving application of the technology. When a company creates a virtual version of a physical item on the blockchain, they make a digital record of that item. Then, comes the information: The specs of the item, its origin, its destination, tracking numbers, and so forth. All stored in the digital record of the item.
But why NFTs? Because non-fungible tokens are immutable and tamper-proof. The information, once entered, cannot easily be changed or altered, preventing fraud. And supply chain fraud is a serious problem that costs companies a lot of money.
While most companies have not tipped their hats on whether they are using NFTs in supply chains yet, many believe that this could become a widespread use in the next decade. Non-fungible tokens could be at the forefront of making supply chains more efficient.
One auto company may already believe that.
The next section tells the story of French automaker Renault and its industrial metaverse.
The Industrial Metaverse: A Case Study
In late 2022, French automobile manufacturer made a stunning claim: It had launched the first industrial metaverse. With its industrial metaverse, it believed it could save $330 million by 2025. Among the benefits would be a 60% reduction in delivery times and a 50% drop in its vehicle production carbon footprint.
The move made headlines throughout the Web3 space.
When most people think of a metaverse, a decentralized virtual world where people shop, interact, and start businesses comes to mind. But Renault was thinking differently.
Its industrial metaverse was an extended ecosystem that included sales forecasts and supplier data. The technologies powering it included the Cloud, 3D, and Big Data. And, of course, there were the digital twins.
“Digital twins” is a popular term that refers to the process of making a virtual replica of a physical object. Many companies launching NFT collections have created them. Sell 5,000 IRL shoes, create 5,000 digital sneakers. The goal is to make something useful in both the physical and virtual world.
A digital twin doesn’t necessarily need to be an NFT, but the technologies are similar and so are the benefits. Digital twins provide provenance, an ability to know where something came from, as well as all sorts of other information. They can provide an in-depth look at processes within a supply chain.
And that leads to more efficiency, more revenue, and a healthier company.
NFT technology or similar types can be used in industrial metaverses to optimize systems, spot waste, and track where an object is at any given time. Loss is reduced. There’s no telling if Renault spotted this opportunity first or if it was the first to execute on the idea, but if its use of this nascent tech is successful, many more companies will follow suit.
And NFT tech will have yet another use case in the automotive industry, and beyond.
Into the Future
Congratulations. You’ve almost reached the end of this article.
Just one more section to go. And it may be the biggest use case for NFTs in the automotive industry yet. Here, we’ll start with the story of Alfa Romeo, an Italian car manufacturer.
In June 2022, Alfa Romeo made news for an industry first: It created the first car line paired with an NFT. The car was the Tonale, an SUV with a price above $40,000.
So, would the accompanying NFT be a digital twin usable in the metaverse or a piece of art?
It turns out, neither. Alfa Romeo debuted the automotive industry’s first known, consumer-facing set of NFTs that contained the vehicle specifications. In the NFTs were the vehicles’ VIN numbers, mileages, battery usage (if the SUV was a hybrid model), driving modes, and more. They were utility NFTs at their finest.
Because, the reality is, the automotive industry has a problem: The reselling of vehicles often includes a lot of fraud. In fact, odometer fraud in the United States alone is a $1 billion problem. Other types of fraud include title washing, VIN cloning, and lowballing. Some are deceptive trade practices, others are criminal activity.
As Alfa Romeo knew when it launched the collection, NFTs can help solve this problem. As stated in other sections, they are immutable and nearly tamper proof. Only the creator of the NFT set can change its metadata, and those are unlikely to be the people reselling the car.
Say goodbye to odometer fraud. To title washing. To lying about repair histories.
The NFT knows all, and the buyer will be able to see it. In the future, more automakers may choose to issue NFT sets like the one Alfa Romeo launched, which would protect customers and better the industry as a whole.
NFTs are set to revolutionize the automotive industry as we know it.
The NFT space is still young, incredibly young, and the extent to which the technology can be used has not yet been fully explored. Currently, the automotive industry is experimenting with it, and as these stories show, the results could be huge.
Even if the bear market is upon us and our bags heavy, innovation is occurring at a rapid pace. We believe that there are few brighter times to be involved in the space, and that’s a hill we are willing, figuratively, to die on.
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