Alfa Romeo Uses NFTs to Track Vehicle Service Records

In 2022, the introduction of another premium compact crossover utility vehicle is hardly a huge news story in the automotive industry. Even when Italian performance brand Alfa Romeo introduces its first entry into the segment with a plug-in hybrid powertrain, it’s not especially noteworthy. However, the recent introduction of the 2023 Tonale warrants some consideration because it will be the first vehicle that comes standard with a non-fungible token (NFT). 

NFTs have garnered a lot of media attention recently, but their actual value or usefulness has been dubious at best. For those unfamiliar with the concept, an NFT is effectively a receipt pointing to some digital asset that the token holder has acquired ownership rights to. The receipt or token is stored in a blockchain where it is cryptographically locked, making it immutable. The blockchain itself is a public distributed ledger where each entry is cryptographically hashed with the prior entries, ensuring that no entry can be modified without being detected. 

NFTs Have Multiple Uses

Most of the uses for NFTs to date have been for sales of digital art, often at extremely inflated prices. The problem is that the digital assets are still easily reproducible. Even if someone doesn’t own the token, it doesn’t really matter if they just want a copy. This makes the value of token ownership questionable. 

The Tonale NFT uses the same core technology for what seems to be a more useful application. Rather than selling the NFTs, the asset it points to is a digital certificate containing the vehicle’s entire service history from the time it left the assembly line. Any time that work is done on the Tonale by an Alfa Romeo dealer or authorized service provider, it will be logged to the service certificate, and a new blockchain transaction for the token will be added.

The goal is to establish the provenance of each Tonale throughout its lifespan. Buying used cars has always been a rather hit-or-miss proposition. Buyers can never be exactly sure about the true service history, which can make them reluctant to pay a premium. In recent years, Alfa Romeo’s products have been widely lauded for their design and performance, but their reliability is perceived as a weakness. In turn, resale values have been subpar compared with the competition. Alfa Romeo is hoping to change that trend with this digital service record. If a Tonale can demonstrate that it has a clean service record with few problems, the hope is that residual values will rise, which will reduce the total cost of ownership of the vehicle. 

NFT Use Could Spread to the Entire Industry

Automakers and mobility service companies have been evaluating how to take advantage of blockchain technology for several years, including for tracking ride-hailing transactions. None of these solutions have been commercially deployed yet. If the Alfa Romeo system works smoothly and the transaction costs aren’t excessive, this approach could become widely adopted. 

One of the biggest challenges will be how to integrate third-party repair providers. According to Larry Dominique, head of Alfa Romeo North America, the automaker is still working on making that possible. Since the Tonale is a new global vehicle that will be under warranty for several years, most of the work will likely be done by dealers for some time to come. If other automakers adopt this technology, standards could be developed that make interoperability possible. However, if third-party support is not acquired, it could incentivize customers to use authorized service providers and undermine right to repair efforts that allow owners to repair their own vehicles or choose where to have work done.