The AI Boom Is One Of The Reasons GM Now Anticipates A Rise In New Car Prices This Year

Global AI adoption is driving a massive surge in chip demand, causing DRAM prices to skyrocket. This “chipflation” is forcing automakers to pay more for critical components, leading to inevitable price hikes for new vehicles as manufacturers struggle with rising costs and supply shortages.

DRAM chip costs have surged six-fold this year, heavily impacting modern vehicles that rely on them for everything from basic cabin functions to advanced driver-assistance systems.

GM CFO Paul Jacobson warns that supply constraints and rising material costs, excluding tariffs, will likely intensify in the second half of the year. AlixPartners reports that while the auto industry uses 10% of global DRAM, the AI sector consumes 32% and is projected to reach 48% by 2028. This surge in AI-driven demand is creating widespread chip shortages and significant price pressure on automotive manufacturers.

Nikkei Asia reports that automakers like GM and Ford are securing long-term supply deals with Micron to combat DRAM shortages. Consequently, GM has raised its North American pricing outlook by 0.3% this year, citing “chipflation” as a key driver for the increase.

Chinese manufacturers are hit hardest by high-tech reliance; memory costs for their EVs reached over $70 per unit by November 2025, compared to $30 for Japanese cars. BYD has already raised driver-assistance system prices by 20% to manage these rising global memory costs and maintain quality standards.

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