GM Predicts New Car Prices Will Rise This Year—AI Chip Demand Is the Culprit

General Motors (GM) now expects average new car prices in North America to climb 0.3% this year instead of staying flat or dropping 0.3%, citing a surge in artificial intelligence-driven demand for DRAM memory chips as a key factor. The automaker’s chief financial officer, Paul Jacobson, told Nikkei Asia that material input costs will rise by $1.5 billion to $2 billion in 2024, though he did not specify how much of that increase is directly tied to semiconductor expenses. The pressure is expected to intensify in the second half of the year. The automotive industry accounts for roughly 10% of global DRAM consumption, according to AlixPartners, while AI and data centers already consume 32% of the world’s DRAM output—a figure projected to climb to 48% by 2028. The imbalance between soaring demand and constrained supply has driven DRAM chip prices up sixfold over the past year, with automakers scrambling to secure long-term supplies. GM, Ford, and seven major automotive suppliers, including Denso and Astemo, have signed extended supply agreements with Micron to mitigate future shortages. The chip crunch is hitting Chinese automakers especially hard, as their advanced new-energy vehicles rely more heavily on high-end electronics. Huayuan Securities estimates memory costs in Chinese-built cars at over $70 per vehicle as of November 2025, compared to about $30 for Japanese models. BYD recently raised prices on its optional driver-assistance systems by 20%, explicitly blaming the global spike in memory prices. Industry analysts warn that as AI and data centers dominate DRAM allocation, automakers will continue to face upward pressure on production costs, forcing further price adjustments across the board.