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  • Writer's pictureAlexander Renz

Drive Towards Web 3.0

The automotive sector is undergoing the most radical transformation since the inception of the motor carriage in 1886. The transition to battery electric vehicles (BEV) is a massive transformation that makes incumbent’s existing assets and know how obsolete. This transformation favors new players without ICE legacy businesses and unquestionably will lead to further consolidation and new winners. Whilst the public and politicians are focused on electric mobility, and even more profound shift is happening that challenges the traditional paradigm of automotive engineering as a "machine building problem". The future of automotive is software and hardware engineering problem as cars turn into computers that happen to have wheels. As much as electric vehicles dominate the headlines, the shift towards a future of connected, software-defined cars and autonomous robotic vehicles is the more profound transformation of the industry. Traditional OEMs are struggling for years to replace legacy E/E Architectures dating back to the 90’s with a new generation of super computers with true platform capabilities and full OTA support. The challenges, attempts and failures of traditional auto makers in making this transition through dedicated software teams, acquisitions and partnerships are well documented. The competition in this new world are not only new market entrants, but powerful tech giants that came to dominate the centralized world of Web 2.0 and now seek to expand their reach into mobility. In light of their own limitations and the sheer dominance of services, more and more car brands have formed partnerships with tech giants that create more and more dependencies and future pain.

At a time when tech monopolies seek to disrupt incumbent automakers by partnering with them, they find themselves under increasing regulatory scrutiny. Platform giants are scrutinized not only for anti-competitive behavior that stifles innovation. They have also been proven to violate data privacy laws and unfairly exploit user engagement (and addiction).

So far, there have been next to no alternatives to the dominant services provided by platform monopolies. Consumers, businesses and governments alike had little if any choices. Likewise, incumbent automakers had no choice but to make themselves increasingly dependent on platform players as automotive value chains transform and profit pools shift away from hardware and towards software, data and services. Should automakers continue to play by the rules set by the Web 2.0 platform economy, the industry will inevitably decline and loose brand value, customer relationships and face decreasing share of consumer wallets.

Emerging Web 3.0 technologies that promise a new era of decentralization and digital sovereignty now lead to a situation where platform monopolies, who thus far control critical infrastructure (cloud, networks, operating systems etc.), key services and related data and ecosystems may soon face real competition and potential disruption. Web 3.0 technologies are maturing to a point where they become sufficiently scalable, cost effective and environmentally sustainable to warrant serious exploration, targeted investments and measured implementation. Yes, there are inflated expectations and hype in the space, including bad actors. That said, especially considering the long development cycles and ongoing digital transformation in the automotive sector, it is now warranted to develop a vision and strategy, fund the effort and create optionality for identified plausible (and desirable) futures.

Not only are Web 3.0 technologies advancing rapidly, but also regulations will evolve over the next years to eliminate or reduce current risks. Where Tesla has invested deeply in its own infrastructure to create an “Apple-like” walled-garden ecosystem that combines renewable transportation with energy and telecommunications infrastructure, Web 3.0 will empower massive ecosystems tied together through a shared digital trust fabric based on open-source protocols that no individual entity owns and controls.

Data is becoming a new infrastructure in these emerging ecosystems. Existing data siloes need to make way for the new realities of converging industries, i.e. new mobility and renewable energy, telecommunications and smart infrastructure. In this new world, data hast to be sourced directly from connected devices to be processed in real-time and delivered to various end points in the enterprise and across the ecosystem in a controlled fashion. Physical products that generate data can now become a key control point in a decentralized world. Physical products as the root of trust create new opportunities to establish verifiable and immutable data. This increases the value of data and enables new data sovereignty and governance models. Data becomes an asset that can be traded in a frictionless and scalable manner through decentralized marketplaces and associated monetization models driven by tokenomics.

Beyond data, advancements in connectivity, robotic systems and artificial intelligence increasingly open new horizons for physical products to become autonomous economic actors. A world where vehicles turn from fast depreciating assets into productive assets that generate passive income for their human owners. A future where we measure economic value based on outcomes achieved (such as miles driven) with the least externalities (such as emissions) generated.

We are at the cusp of a new era that is no longer based on surveillance capitalism controlled by digital overlords that control data, networks and compute infrastructure alongside the most critical services. Platform monopolies come under increasing scrutiny from regulators, anti-trust and consumer protection bodies. At the same time, a new Web 3.0 ecosystem is emerging around digital identities, distributed ledgers, smart contracts and related dApps that has already gained massive traction in decentralized finance (DeFi), Non-Fungible Tokens (NFTs) and the emerging Metaverse. From here, Web 3.0 technologies will dissipate into the physical world as virtual worlds converge with real world assets.

The world of automotive and mobility has an opportunity to actively shape this new era. Is there risk? Yes, there is. But in a world of exponential change there is only one certainty. If you play by the rules of the Web 2.0 platform economy, you can only loose. As Web 3.0 emerges as a new paradigm that will eventually make Web 2.0 obsolete, the automotive and mobility sector can shape a desirably future of scalable, low cost and open ecosystems. Sometimes it is good to be late to the game. It allows you to build optionality for Web 3.0 into forthcoming software-defined vehicle architectures! Let's talk to explore how you can "ape in" and shape the drive towards Web 3.0!

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