VANKHONG
Background Information Fjord Cars is an innovative electric motor…
Background Information
Fjord Cars is an innovative electric motor vehicle manufacturer with a market presence in eight
countries (United States, Canada, United Kingdom, Australia, New Zealand, Republic of Korea, Mexico
and Ireland). Established in 2010, Fjord has gone from a niche car manufacturer to a major new ‘player’
in the car industry. Led by its enigmatic CEO, Laura Tusk, Fjord has revolutionised the electric car
market, producing well-built, stylish cars with exceptional battery performance. As a result, Fjord cars
have attracted strong customer demand, with long waiting lists for new cars. However, with an
increasing number of traditional car manufacturers starting to produce electric cars with even better
battery performance, Fjord Cars has been under pressure to retain its position as the most innovative,
coolest car brand and to continue to ensure their cars remain unique.
In response, Fjord has been considering several new initiatives. One of these initiatives involves
partnering with a new start-up company called ‘Block2Block’ to develop a new blockchain-enabled
vehicle service logbook for the cars it manufactures.
Car service logbooks record the car’s maintenance history, the mileage and battery health at each
service, what car parts/components have been replaced and what repairs have been performed. It is
an important record for those who intend to sell their car in the second-hand market because those
who buy second-hand cars want confirmation that a car has been looked after and has been
maintained regularly. A car’s logbook provides this confirmation. This record is arguably even more
important in the electric vehicle market, given that proper servicing is central to protecting and
maintaining battery performance, unlike combustion engines. Switching to a blockchain-enabled
vehicle service logbook would enable individuals to replace the existing paper logbook with a
perpetual and unchangeable digital record of the servicing they have had on their cars.
The blockchain-enabled vehicle service logbooks would be integrated with Fjord’s spare
parts/components manufacturing process. This integration would mean that Fjord could ensure that
their customers only use spare parts manufactured by Fjord instead of using cheaper
parts/components manufactured by third parties. Whilst Fjord’s innovative electric cars have meant
that they have rarely had any competition from third-party spare parts/components manufacturers,
as Fjord cars have become more commonplace, a spare parts/component ‘grey market’ has emerged
to undercut Fjord.
In addition, the data collected from the car computers would be uploaded to the blockchain logbook
at each service, which would mean that Fjord would gain access to a large amount of data about the
car’s operation. This data would include how long specific parts/components lasted in the car, how a
car’s mileage impacted this and how a customer drove their car (for example, the speed the car usually
drove at, how long the car was kept idle, battery performance and charging, the road surface the car
drove on, the length of time the car was usually driven, and how sharply the driver used the brakes).
Because ‘Block2Block’ was developing the system, it would also have access to this data.
If Fjord was to introduce the new system, new customers could not opt out for the first three years.
Customers would receive free access to the blockchain logbook for the first three years of the car.
After this, they would need to pay a monthly subscription fee to continue using the blockchain logbook
and to access the stored data and records. Apart from the benefits of the logbook for customers whenthey sell their car, customers would also maintain their 6-year extended car warranty if they continued
using the blockchain-enabled logbook. In addition, only Fjord-authorised car service centres (motor
mechanics) would be able to access the blockchain logbook system. This would mean customers could
not have other (third-party) motor mechanics service their cars. Although this would not be unusual
in the car industry or for Fjord; Fjord already requires customers to get their cars serviced (maintained)
at Fjord Authorised Service Centres to keep their extended warranty. For customers, the system would
prevent the loss/damage/alteration of a car’s traditional paper logbook and safeguard a record of
their car’s service/maintenance history.
As ‘Block2Block’ are entering into a partnership with Fjord, they would co-fund the costs of the
development of the system. They would then be entitled to a percentage of the monthly subscription
fee collected from customers.
Laura Tusk, Fjord’s CEO, is very excited about this proposal and thinks there may be further
opportunities to monetise a Fjord logbook blockchain. She has also personally invested heavily in
Bitcoin and regularly tweets about this, drawing his followers’ attention to the latest digital coin
offerings.
Assessment Task
a) Explain what blockchain is and how you would see it working in the context proposed by Fjord
Cars.
b) Identify the problem(s) Fjord is trying to solve by introducing the proposed blockchain system.
c) Identify the ‘value-add’ for customers, for Fjord and for Block2Block in implementing this
system and collecting the data.
d) Identify the challenges to implementing a project of this nature, for Fjord, for Fjord service
centres, for Block2Block and Fjord customers.
e) Consider whether the proposal will likely enhance or decrease Fjord car sales and why.
f) Consider whether other technological methods – other than blockchain- might address the
problem you identified in b), what these methods are, and why they may be more beneficial
than blockchain.
g) Consider the legal and ethical risks the proposal raises and how Fjord might address these
risks.
h) Based on what you have discussed in response to parts a) to g), provide a recommendation of
whether Fjord should go ahead with plans to partner with Block2Block to introduce a
blockchain vehicle servicing logbook. Ensure that you justify your recommendation.
