RAMageddon is threatening to shove car prices higher as AI outfits gobble up the memory chips needed by modern motors.
According to The Atlantic cars now need microprocessors and RAM to run infotainment, driver-assistance systems and the growing pile of software automakers insist is progress.
iSeeCars executive analyst Karl Brauer said the tech bill is now baked into every new vehicle and there’s just a baseline level of tech, and thus a baseline level of cost, required of every vehicle.
The average price of a new car in the US has already wandered close to $50,000. That was before RAM became one of the hottest commodities in the world.
AI companies are buying memory for data centres like there is no tomorrow. The squeeze has already pushed up prices for phones, laptops, gaming consoles and other consumer electronics.
Telemetry analyst and former automotive engineer Sam Abuelsamid said the shortage, dubbed RAMageddon, could lift vehicle prices by a few percentage points during the next year. A four per cent rise on a $50,000 car works out at about $2,000.
“Even if you don’t need the high-end chips, you’re going to pay more even for the low-end chips just because of the supply constraint,” Abuelsamid said.
Ford told investors it had incurred $1 billion more in materials costs due to memory shortages and inflation. GM and Volkswagen have made similar noises about chip costs.
A Volkswagen spokesperson said the company has “recognised an increased demand for memory chips, primarily driven by growing requirements in other industries,” and said it had taken steps to “mitigate supply risks.”
RAMageddon could drag on for years, leaving buyers stuck with higher prices. The pandemic chip shortage pushed carmakers towards posher, higher-margin models, and the average new vehicle price has climbed $11,000 since then, while software subscriptions, in-car adverts and paywalled features make cars look more like computers with wheels.
