The AI Boom Is About to Make Cars Even More Expensive - The Atlantic

New drivers may never have to learn how to parallel park. At least not the old-fashioned way. Many new cars—a Ford Mustang Mach-E, a BMW sedan, a Tesla Cybertruck—will just maneuver into a spot for you with a click of a button. Even a decade-old Toyota Corolla has a backup camera and pedestrian detection. Cars that leave you to park all on your own are a dying breed: Any car manufactured after April 30, 2018, for sale in the United States is legally required to have a backup camera and, thus, a screen.

After all, cars are just computers now. The screen (or really, screens) in today’s vehicles does a lot more than display rearview footage. It is essentially a tablet wedged into the dashboard that allows you to mirror your phone through Apple CarPlay, make a hands-free call via voice commands, Zoom into a work meeting, or even play a video game (not recommended). Mercedes-Benz debuted a 56-inch display in several models that it calls the “hyperscreen.”

But the expectation—and in some cases, the requirement—that cars have an ever-growing set of electronic features comes with a cost. Just like laptops, cars depend on microprocessors and RAM, or random-access memory, to run all of their computations. “There’s just a baseline level of tech, and thus a baseline level of cost, required of every vehicle,” Karl Brauer, the executive analyst at iSeeCars, an automotive-research platform, told me. Technology is a major reason the average price of a new car in the U.S. has reached some $50,000, and that was before RAM became one of the most prized commodities in the world. AI companies are snatching up as much memory as possible for their data centers, causing a RAM shortage that has significantly raised the prices of phones, laptops, and just about any consumer-electronic device. Cars are next.

The problem runs much deeper than a screen. Cars started morphing into computers in the 1970s, when new emissions standards made electronic systems necessary to manage ignition and fuel injection. There’s been a gradual software creep ever since: power windows, adaptive cruise control, antilock brakes. Regulators now rate cars based not just on how they do during a crash but also on how well their electronic safety systems avoid a crash. “We’ve evolved every single component of the vehicle to involve a semiconductor,” Ivan Drury, the director of insights at Edmunds, told me.

More recently, Tesla in particular has played a big role in pushing the auto industry to stuff vehicles with even more digital technology. Whereas pistons and fuel lines make a gas-powered car move, electric vehicles are run by a computer that regulates their battery and motor. It’s no coincidence that Tesla helped popularize the giant in-car touch screen. Today’s new cars, electronic or otherwise, have driver-assistance features, receive over-the-air software updates, and can even load ChatGPT. BMW advertises the ability to have a distinct climate-control setting for every passenger and the option to install screens into seat backs, airplane-style.

In most vehicles on American roads, all of this software is controlled by hundreds of separate electronic units throughout the car. Features such as antilock brakes and lane-detection sensors don’t need all that much processing power, and they can be operated by chips that might account for 5 to 10 percent of a vehicle’s materials cost, Sam Abuelsamid, an analyst at Telemetry and a former automotive engineer, told me.

Again following the lead of EV start-ups such as Tesla and Rivian, legacy automakers are shifting from these ad hoc, tiny control units to one or two big computers that run all of the software in their vehicles—and, in turn, require much more RAM. These central computers allow for a streamlined supply chain, seamless software updates, and a faster internet connection, plus, as General Motors advertises, they will be ready for “future AI workloads.” You can’t really build a car that safely and reliably drives itself with a collection of puny computer chips. Such centralized computers need more advanced automotive microprocessors from Nvidia or Qualcomm and might eventually account for 20 percent or more of a vehicle’s cost, Abuelsamid said. That was before the AI-fueled memory shortage. In other words, cars are becoming more software-heavy and dependent on memory chips than ever, right when those chips are in high demand from tech companies willing to pay premiums that automakers cannot afford.

Over the next year, the memory shortage—sometimes known as RAMageddon—will likely raise vehicle prices by a few percentage points, on average, Abuelsamid said. The relative amount would be smaller than the shocking double-digit jumps for gaming consoles and MacBooks but in some ways more significant: A 4 percent price hike for cars amounts to some $2,000 on average. Cars with those centralized computers will be affected the most, but...