Automotive Cybersecurity Market to Grow
Most investors know that two of the biggest tech trends belong to cybersecurity and 5G. But there is a subsector that marries these two juggernauts and has even bigger profit potential.
Over the next number of years, automotive cybersecurity stocks are expected to soar, with the automotive cybersecurity market poised to grow from $187.0 million in 2017 to $837.0 million by 2024. (Source: “Automotive Cybersecurity Market Report Industry Size Forecast 2024,” Global Market Insights, Inc., last accessed February 19, 2020.)
That’s a gain of almost 350%, for a compound annual growth rate (CAGR) of 24%.
The Internet has made the world a smaller place, with everyone just a click away. Unfortunately, that also means the existence of hackers.
It didn’t take long after the birth of the Internet for hackers to realize how valuable the information on our computers is. Early viruses attacked computers on different levels; some just slowed them down while others turned off the cooling fan. Today, malware steals data, locks users out, and can be used to blackmail.
The rise of cyberattacks has been a boon for cybersecurity stocks. Thanks to the rise of e-commerce and the growing interconnectedness through 5G technology, the cybersecurity market is going to continue to grow.
According to the latest data, the global cybersecurity market is projected to climb from $112.0 billion today to $281.7 billion by 2027. That represents seven-year growth of almost 152% and a CAGR of 14%. (Source: “Cyber Security Market to Register an Impressive CAGR of 12.6% till 2027, Says Fortune Business Insights,” Cision PR Newswire, February 17, 2020.)
Solid numbers indeed, but even those big numbers are dwarfed by the projections for the automotive cybersecurity market.
Why the huge growth projection? You can thank the advent of 5G technology.
5G Tech Will Drive Automotive Cybersecurity Stocks Higher
5G technology is crucial for autonomous vehicles. For starters, 5G is super-fast, increasing mobile browsing speeds 100-fold, transmitting data in real time for the first time ever.
Reducing lag time between devices to zero is the Holy Grail of the Internet of Things (IoT)—and 5G gets us there. Having vehicles and smart cities talk to each other will make driving safer. Eventually, the proliferation of self-driving vehicles and smart cities could result in zero auto accidents.
We’re not there yet, but 5G is certainly an enormous improvement over previous generations of mobile technology, and an even greater improvement over human behavior.
Case in point: a human driver’s reaction time between seeing a hazard and hitting the brakes is around one second. That sounds fast, but if you’re driving at 60 miles per hour, that one second translates to 92 feet.
It’s a different story for 5G. It can analyze and react to that same hazard in one millisecond. At 60 miles an hour, 5G tech can hit the brakes in under half an inch.
Granted, 5G mobile networks are only now being deployed, and we’re still several years away from total adoption. But the potential for 5G connected autonomous vehicles is enormous. This might partly explain why telecom carriers are investing billions of dollars in 5G networks.
Automotive Cybersecurity Breaches Surge
Driverless technology is only as safe as the cybersecurity systems protecting it. The threat of cyberattacks remains real.
Right now, 330 million vehicles are connected, and the biggest auto brands in the U.S. had said they would only sell connected vehicles by 2020. (Source: “Automotive Cybersecurity Incidents Doubled in 2019, Up 605% Since 2016,” Help Net Security, January 6, 2020.)
All of the collected data, along with the vehicle itself, is just a little too tempting for hackers. They could take that information to gain control of the vehicle or to steal it. Hackers could also get other sensitive information from a connected car, like the data found in its global positioning system (GPS).
Not surprisingly, the number of vehicle cybersecurity breaches has soared over the last few years. Since 2016, the number of incidents reported annually has risen by 605%. Over the last year, the number of incidents has more than doubled.
The top three areas of attack over the last 10 years were keyless entry systems, backend servers, and mobile apps. The top three types of incidents were thefts/break-ins, taking control of car systems, and data breaches.
Which automotive cybersecurity markets are growing the fastest?
Network security, which protects both the internal and external networks, takes up the lion’s share at 36.4%. Cloud security is the fastest-growing segment of the automotive security market, with a CAGR of 29.4%. (Source: “Automotive Cybersecurity Market Report Industry Size Forecast 2024,” Global Market Insights, Inc., op. cit.)
The rapid increase in automotive cybersecurity breaches and the ongoing probability of a vehicle being hacked has led to a number of cybersecurity companies partnering with automakers to develop and enhance their security features.
This has helped juice a number of automotive cybersecurity stocks. And those gains are only expected to rise over the coming years.