Blockchain in the
Automotive Industry

Imagine a factory where an employee writes down delivery data on a piece of paper and then faxes it to headquarters. Sounds like a scene from the 90s, right? Yet in 2025, many global companies, even leading ones, still rely on such manual processes. Paper notes, faxes, and sometimes even mail – this is everyday reality in supply chain management. The result? Data gets lost, becomes illegible, or differs between factories of the same company. One plant in China records something differently than another in Germany, and when it comes to audits or reports, harmonizing this information becomes a nightmare.

For example: a truck with screws arrives at a BMW factory, but the documents claim it's parts for a different model. Workers search for the right components, waste time, and production gets delayed. Add to that the environmental aspect – tons of paper used for documentation is not just chaos, but also a burden on the environment. Manual processes mean human errors, data loss, and lack of consistency. It's a system that barely keeps up with the needs of the modern world.

Inefficient supply chain management is a huge problem for large companies. Industry reports (Deloitte's 2023 analysis) estimate that global losses can reach billions of dollars annually, especially in the automotive sector, where logistics errors lead to delays and recalls. Moreover, counterfeit car parts are a serious threat. Reports published by the Alliance of Automobile Manufacturers indicate that the counterfeit parts market in the USA generates annual losses of around $1 billion, and globally this could be as much as $12 billion. These parts often lead to failures, and in the worst cases, fatal accidents. For example, in 2017, Toyota had to conduct a recall due to faulty airbags, which involved costs of over $2 billion and tragic accidents. This additionally burdens companies with legal costs and loss of reputation.

How can blockchain help in supply chain management?

Now let's imagine a different world – a world where blockchain organizes this mess. But we're not talking about public blockchains like Ethereum that we know. Why? Because factories like BMW process trillions of transactions daily, and public networks at such scale are too slow, too expensive, and most importantly, too open. Enterprises need privacy. They don't want their data visible to everyone, only to trusted partners: suppliers, dealers, or auditors.

The solution is private blockchains with a Proof of Authority (PoA) mechanism. What does this mean? In PoA, there are no miners fighting for rewards or transaction fees. The infrastructure is maintained by trusted nodes – e.g., BMW and its key suppliers. Anyone who wants to join the network must be invited and verified. Pioneers are already implementing such IoT (Internet of Things) in factories, which additionally automatically records data on the blockchain, eliminating manual entries.

Gartner's 2024 research indicates that by improving transparency and tracking part origins, blockchain can save up to 20% of supply chain-related costs, eliminating counterfeits and streamlining processes.

The life of a single screw

Let's take an ordinary screw in a BMW car. Its story begins in a mine in Australia, where iron ore is extracted – this moment goes on the blockchain. Then a factory in China processes the ore into sheet metal, another entry. In Germany, it becomes a screw – another record. Finally, BMW installs it in the car, and the information lands in the system. If something goes wrong, a dealer in New York can find this screw in the system and see its entire journey: from the mine to the workshop. Need a copy? Ordering takes a moment.

This is full traceability, or origin tracking. Combined with AI, such data can also support predictive maintenance – blockchain will suggest when to replace a part before it breaks. This is not just convenience, but also protection against counterfeits – every screw is authentic because its history is impossible to fake.

Emotional bond with the car – blockchain makes it possible

A car is for many of us more than just a machine – it's emotions, a lifestyle, sometimes even a family member. Thanks to blockchain, you can see how your car is built, step by step. Imagine a digital album: from the first screw in the factory, through engine assembly, to the moment your BMW rolls off the production line. It's like watching photos of your child growing up.

At codefunded, we also dream that this can go further – it will allow customizing the car to your preferences even at the production stage, e.g., choosing the color of screws or interior materials, and you see how these choices become reality. This builds trust in the brand and makes you feel part of the process.

What problems does blockchain solve?

Blockchain is like an indestructible journal where every entry is visible, permanent, and secure. It solves problems of:

• transparency, because everyone sees the same data – from supplier to dealer.
• trust, because data is immutable – once recorded, it cannot be changed or deleted.
• security, because information is protected and resistant to loss.

In the European Union, where regulations like Digital Product Passport require detailed part registries and audits, blockchain is the perfect tool. BMW can easily prove compliance with regulations by showing tamper-proof logs on the blockchain. This also means fewer frauds, errors, and easier scalability of the network to new factories or suppliers.

Is integration with existing systems difficult?

Not at all! Most factories already use SCADA/PLC systems that collect data from machines and send it to the cloud or data centers. Adding blockchain is like connecting a new SAP module – simple and fast. For example: a worker at a BMW factory confirms screw installation on a tablet, and the data goes to the blockchain in a second.

But it's worth remembering that data on the blockchain is immutable, so errors cannot be "erased", only corrections can be added. That's why human-in-the-loop is crucial – a person who supervises the process. A screw goes through stages: extraction, cleaning, transport, polishing, forming, installation – each of them is a separate status on the blockchain. Moreover, you can "go back in time" to any moment and check where other car parts were and in what condition. This opens doors to historical analysis, simulation, and process optimization.

What is Hyperledger Fabric

Hyperledger Fabric is a blockchain platform for enterprises, created by the Linux Foundation in 2015 at IBM's initiative. The platform is open source, meaning anyone can contribute to its development and freely use it. Smart contracts are written in Go, Java, or JavaScript, and transactions are free (no gas fees). The network handles thousands of transactions per second (TPS), and in tests reaches up to 2000 TPS, making it suitable for factories processing trillions of operations daily. Consensus can be customized to specific enterprise needs, adding additional validations, such as checking digital certificates.

Files, like photos or PDF documents, are not stored directly on the blockchain due to size – instead, their hashes are recorded, i.e., unique fingerprints that ensure authenticity. For example, BMW can record a hash of a part quality certificate and store the file off-chain, which protects against counterfeits.

Access to Hyperledger Fabric is strictly controlled, making it ideal for large companies that need privacy. The network is based on a permissioned system, where only trusted organizations can join after verifying their identity. The process looks like this: a new organization, e.g., a parts supplier, must be invited by existing members, and its identity is verified by a Certificate Authority (CA), which issues digital certificates.

Hyperledger platform created with business in mind, which allows precise specification of who can do what in the system. There are those who write data – the so-called "writers", i.e., selected nodes called endorsing peers. They have the right to approve transactions and add new entries to the blockchain. For example, a factory in Germany can record that a screw was produced, but no one else will do this until the data passes through this trusted point. It's a bit like a guard who ensures that only true information enters the book. On the other hand, readers, i.e., "readers", are all authorized participants who can look at the data but don't change it. A dealer in New York will check where the screw comes from – from a mine in Australia to installation in Munich – but has no ability to add or remove anything. It's a great way to share information without the risk of chaos.

Industry examples

Hyperledger has gained recognition among global giants who use this platform daily in various fields, including supply chain management.

BMW uses Hyperledger Fabric in its PartChain project to track car parts from suppliers to finished cars.

Walmart also bet on Hyperledger, using it to track food – from pork in China to mangoes in the USA.

IBM, one of the platform's creators, develops IBM Food Trust, working with companies like Nestlé or Carrefour to increase visibility in food supply.

Maersk uses Hyperledger in TradeLens, optimizing global maritime logistics – from documentation to container tracking.

Lockheed Martin, a defense giant, to streamline the process of purchasing aircraft parts, uses Hyperledger Fabric, which allows suppliers to register their parts on the blockchain, and Lockheed Martin can easily find, verify, and order them.

How can Codefunded help?

Codefunded is a team that knows how to introduce blockchain into the supply chain. We've already worked with a large European car manufacturer (details under NDA), helping to implement Hyperledger Fabric in their supply chain. The result? The system operates at full scale, increasing efficiency and regulatory compliance.