The proliferation of the non-fungible token (NFT) marketplace has helped many of the world’s most important brands ascend to new heights. As the digital world—currently manifested by “Web 3.0”, the “Metaverse”, and other digital spheres—continues to expand, brands of all kinds, including those in the well-established automobile industry, are finding new opportunities to enhance their global image and create accessible value.
Over the past two years, we have seen NFTs used in nearly every industry. However, as we will further explain below, there are actually quite a few reasons why NFTs are especially productive for brands involved in the automotive industry, including the industry’s pre-existing demand for collectibles, the widespread existence of automotive “Super Fans”, the relatively high value of most products in the industry, and many more.
Unsurprisingly, many of the industry’s most groundbreaking brands have already taken a deep dive into the world of NFTs. By the end of this year, the NFT marketplace will likely be worth more than $300 billion. But how, exactly, can these innovative assets transform the ways the world’s leading automakers market themselves to the broader public?
What is a Non-Fungible Token (NFT)?
The acronym “NFT” stands for non-fungible token. That probably doesn’t really clear things up, so let us explain. Non-fungible is a term that is used to describe assets that have no other identical replicates. The dollar (or Bitcoin, for example) is fungible in the sense that any single dollar is worth exactly the same as any other dollar. But when an asset is non-fungible, that means there is no other asset exactly like it in the world.
So, what about the “token” aspect? Essentially, tokenization is the process of turning a digital “idea” into an asset that can be bought, sold, valued, and traded. All tokens have a definable value, which traders are able to speculate. Ultimately, this means an NFT is a digital asset that has been both tokenized (turned into a tradeable commodity) and made non-fungible (unique and with no other replicates). For example, if someone owns an NFT that is connected to a specific asset, such as a car, that means that asset will have a tradeable value that cannot be directly matched by anyone else in the world.
How NFTs Maintain Their Value
NFTs, as a relatively new asset class, have not been immune to their fair share of criticism. Many people are naturally skeptical of the NFT asset class, just as many people were (perhaps rightfully) skeptical of the “internet asset class” throughout the 1990s. One of the most common questions prospective investors ask is how do NFTs actually maintain their value?
The answer is simple: NFTs are able to maintain their value through the laws of supply and demand. This makes them no different than the American Dollar or any other global currency. When there is a demand for a particular NFT—which is especially likely when the NFT is connected to a valuable, physical asset like an automobile—the value will be maintained into the foreseeable future. When an in-demand automobile manufacturer is able to offer its NFTs to the public, these NFTs will be perceived by the broader public as both scarce and valuable, which will ensure they actually maintain their value as time goes on.
And this sort of value conservation is not just theoretical—time and time again, NFTs from the world’s most forward-thinking automakers have been able to bring in (and sustain) millions of dollars in value. Mercedes-Benz and Lamborghini, for example, are two of the world’s most well-respected car brands that have been able to capitalize on the NFT market. As the digital world continues to expand and auto manufacturers around the world begin to take notice, the relevance of NFTs in the auto space will almost certainly proliferate further.
Establishing Brand Dominance
The most obvious reason for automakers of the world to push into the NFT marketplace is brand dominance. While other, more traditional marketing spaces—television advertising, social media, and others—have been essentially overcrowded and exhausted by traditional-leaning companies, the NFT space offers a brand-new frontier.
The NFT marketplace combines everything that is demanded within the world of 21st Century marketing: a digital presence, exclusivity, access to an incredibly wide market base, and more. Through the use of this limited space, brands can offer unprecedented promotions, can directly connect with their most loyal followers, and can gain widespread exposure for limited capital in a way that would have previously cost them millions, if not tens or hundreds of millions, of dollars. There have been few, if any, opportunities that have allowed automakers to establish brand dominance in such an accessible way.
Connecting with Super Fans
Of course, NFTs might not appeal to everyone—your average Mercedes-Benz buyer might not be willing to buy much beyond the physical car itself. But keeping the traditional 80-20 model in mind (where 20 percent of buyers generate about 80 percent of all revenue), it is the super fans that ultimately enable the NFT market to become so measurably productive.
Through the loyalty of super fans and the dynamism of the NFT marketplace, almost any aspect of the auto-buying process can be amplified further. An exclusive “digital collectible car”, for example, can generate hundreds of thousands (even millions) of dollars for the original auto manufacturer. And this sort of “ownership” does not even need to be physical—super fans are willing to pay exorbitant amounts of money for these collectibles, not only due to their immediate value, but also due to the fact that they will be worth significantly more in just a short amount of time.
As suggested, the use of NFTs within the auto industry is not just theoretical—it’s played out time, and time again, in real life. Here are just a few examples of some of the world’s most prominent automakers using NFTs to thrive:
- Alfa Romeo: the world-renowned Italian car brand used NFTs in its latest line of hybrid cars to record data and improve overall performance.
- Mercedes-Benz: the German automaker collaborated with a group of several digital artists to launch a series of its world-famous “G Class” into the NFT marketplace.
- Lamborghini: as one of the most respected automakers in the world, Lamborghini was proud to “unveil” a broad-reaching NFT campaign that made digital ownership of the company’s already exclusive products even more desirable.
- Chevrolet: launched via OpenSea, one of the largest NFT platforms in existence, Chevrolet has successfully sold ownership of many of its classic digital assets, including ownership of the Camaro SS 396 and other rare motor vehicles.
Of course, these are just a few examples of how automakers have used NFTs to generate value in an increasingly competitive digital world. Whether it is selling ownership of current assets, existing assets, or even future assets, the world of NFTs presents a vast swath of new opportunities. At Sasco Digital Assets, we would love to help you learn more about how the use of NFTs can help you capitalize on your existing brand value and help your brand evolve to meet the needs of an increasingly digital world.