7 Key Financial Implications of Automotive Cybersecurity Risks

In June 2023, a leading Taiwan-based semiconductor manufacturer disclosed a cybersecurity incident involving a ransomware group and one of its IT hardware suppliers, which led to the leakage of information pertinent to the initial setup and configuration of the system. The attackers claimed to gain access to internal documents with confidential information, demanding a $70 million ransom to decrypt the data and prevent its release online—making it one of the largest known ransom demands in history. 

The $70 million ransom demand may only scratch the surface when it comes to quantifying the full financial impact of a comparable cyber incident. As the mobility ecosystem faces a critical juncture, with cyberattacks gaining greater significance and potentially far-reaching financial and operational consequences for stakeholders, the industry is at a pivotal moment. Upstream’s 2024 global automotive cybersecurity report takes a comprehensive approach to address these challenges, gathering publicly available information to propose a financial impact framework. This framework underscores the staggering financial implications of cybersecurity risks in the automotive sector.

To construct this comprehensive framework, we identified seven key automotive cyber risk dimensions that can yield financial repercussions for stakeholders:

1. Vehicle Safety, Operations & Recalls – Vulnerabilities in vehicle SBOM or HBOM can enable remote or local manipulations that modify the normal behavior of the vehicle, endangering the safety of drivers and passengers. Methods like API exploitation, remotely invoking commands, malicious software updates, and exploiting cybersecurity vulnerabilities can all contribute to these safety and operational concerns, potentially requiring costly recalls by manufacturers to resolve the issues and ensure the proper, safe operation of affected vehicles.
2. Data & Privacy Breaches – The disclosure of sensitive data, such as customer personally identifiable information (PII), vehicle performance data, or valuable intellectual property, can also have severe financial and reputational consequences for both individuals and organizations. Cyber attack methods such as data breaches, data leakage, ransomware, and injection attacks can all lead to severe data and privacy breaches, which can significantly undermine trust and result in substantial financial losses.
3. Vehicle Theft & Breaks-Ins – Attackers exploiting vulnerabilities in vehicle security systems or remote services can gain unauthorized access, leading to theft and posing financial risks for both owners and manufacturers. Keyless entry/start engine attacks, relay attacks, signal jamming attacks, and API attacks are common vectors used to facilitate these vehicle theft and break-in incidents.
4. Service & Business Disruption – Cyber incidents related to Fleets, or IoT devices such as ELD can also disrupt operations and ability to provide goods or services, leading to significant financial consequences. For example, ransomware attacks on production systems can result in temporary or even complete shutdowns of manufacturing lines, causing a loss of productivity, revenue, and customer trust – all of which can have substantial financial implications for automotive companies.
5. Fraud – Malicious activities such as identity theft, odometer tampering, and account hacking, can undermine the new data-driven services and subscription-based business models that OEMs are adopting. These fraudulent activities put these emerging revenue streams at risk. Additionally, fraudulent warranty claims that extend the scope or length of coverage are a major cost concern for OEMs. Overall, these fraud-related issues lead to direct financial losses and reputational damage for organizations.
6. Legal & Regulatory Compliance – Cyber threats that result in violations of laws, automotive cybersecurity regulations, or industry standards can expose organizations to lawsuits, penalties, and other legal consequences. Addressing these compliance challenges presents a significant financial burden for these organizations.
7. Brand & Reputation Risks– Finally, the brand and reputation damage resulting from publicly reported cyber incidents can have long-lasting financial implications. Widespread negative press coverage and the erosion of consumer and investor trust can negatively impact an organization’s financial valuation, market share, and overall viability, making the process of rebuilding a damaged brand and reputation both costly and time-consuming for automotive companies.

As the automotive industry faces large-scale and complex cybersecurity risks, it is crucial to thoroughly understand and effectively mitigate the financial implications. The recent SEC cybersecurity rules, requiring public companies to promptly disclose material cybersecurity incidents, further emphasize the gravity of these risks. By proactively addressing the substantial financial risks, industry players can navigate this ever-evolving regulatory environment and protect operational availability, profitability, and long-term growth.