General Motors now expects average new vehicle prices in North America to rise 0.3% this year, reversing an earlier forecast of flat or slightly lower prices.
The revision is partly due to soaring costs for DRAM chips, which have surged six-fold in price over the past year because of artificial intelligence demand.
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GM Chief Financial Officer Paul Jacobson told Nikkei Asia that the automaker anticipates material input costs to increase by $1.5 billion to $2 billion in 2026.
He did not specify how much of that is attributable to chips, and the figure excludes tariffs.
Jacobson added that the squeeze is expected to worsen in the second half of the year.
AI's Growing Appetite for Chips
DRAM chips handle temporary data storage and are increasingly essential in modern vehicles, powering everything from advanced driver-assistance systems to basic cabin functions.
The automotive industry accounts for roughly 10% of global DRAM consumption, according to consulting firm AlixPartners.
AI has become the largest single consumer of DRAM, taking 32% of global output—ahead of smartphones, computers, and other consumer goods.
AlixPartners projects that share will reach 48% by 2028, warning that once AI and data centers consume half the world's DRAM, automakers and other industries will face higher costs.
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Beyond price increases, widespread supply shortages are hitting the market as manufacturers struggle to keep up with demand.
Carmakers Secure Long-Term Deals
In response, automakers are planning ahead.
GM, Ford, and seven major automotive parts suppliers—including Denso and Astemo—have recently signed long-term supply agreements with Micron.
They are also trying to secure DRAM supplies ahead of anticipated inventory shortages starting next year.
Chinese automakers are feeling the impact more acutely, as advanced new-energy vehicles rely heavily on chips.
Huayuan Securities estimates memory costs in Chinese-built cars exceeded $70 per vehicle as of November 2025, compared with roughly $30 for Japanese vehicles.
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BYD recently raised prices on its optional driver-assistance systems by 20%, citing the significant rise in memory prices worldwide.
