Rising global prices for DRAM memory chips, driven by strong demand from artificial intelligence (AI) applications, are increasing costs for carmakers and threaten to push up new-vehicle prices.
GM forecasts $1.5–2 billion cost increase this year
General Motors (GM) Chief Financial Officer Paul Jacobson said in the company’s recent earnings release that higher raw-material costs, including chip price increases, will raise costs by $1.5–2 billion this year even without tariff effects. Jacobson added that the impact will become more noticeable in the second half of the year. GM did not provide a detailed breakdown, but identified rising DRAM prices as a key factor.
DRAM prices and AI-driven demand
Morgan Stanley’s analysis indicates DRAM prices have risen sixfold over the past year due to exceptional AI demand. Consulting firm AlixPartners reports that last year AI accounted for 32 percent of DRAM usage, and projects this share will climb to 48 percent by 2028. The automotive sector currently accounts for roughly 10 percent of DRAM use, but AlixPartners warns that if AI and data-center demand consumes a large portion of supply, price increases will spill over to other industries.
Supply squeeze as manufacturers shift capacity
The situation is exacerbated by memory makers reallocating capacity toward more advanced, AI-optimized products. While global memory production is expanding, comparatively little of that output is reaching the automotive sector, according to a purchasing executive at a Japanese parts maker who spoke to Nikkei. To secure supply, automakers have been signing long-term deals: GM and Ford agreed long-term supply contracts with Micron Technology this year, and last week seven automotive parts suppliers, including Japan’s Denso and Astemo, signed similar agreements.
Higher memory costs in Chinese-made cars
Data from Hvajüan Securities show that in November 2025 the memory cost per vehicle in cars built in China exceeded $70, the highest level globally and well above the roughly $30 typical for Japanese cars. Chinese vehicles increasingly include advanced features such as smart instrument clusters, AI-based chatbots and driver-assistance functions, while much of the required memory continues to be imported from South Korea and the United States.
Manufacturers passing on costs
Seres Group’s chairman said automotive memory prices have risen fivefold recently, and BYD increased the price of separately purchased driver-assistance features by 20 percent in May. If memory costs continue to rise next year, automakers will likely have little choice but to pass on some of the increases to consumers. GM’s recent forecast expects North American new-vehicle prices to rise by 0.3 percent this year, a meaningful shift from earlier expectations of flat or slightly lower prices.
Market context
According to Edmunds, the average price of a new vehicle in the United States reached $48,000 in 2025, nearly a 30 percent increase from 2019, while the share of models available for under $25,000 has fallen to about one-fifth of its 2019 level. The reallocation of memory production toward advanced AI products may therefore have material effects on automotive costs and consumer prices going forward.
Tags: automotive industry, Ford, artificial intelligence, vehicle production, price increases, General Motors, chip, memory, semiconductors
