Why Are Prices for Cars and Tech Suddenly Spiking? Blame AI Data Centers.

If buying memory chips for phones and laptops is hard, just imagine what it’s like purchasing them for a new car. A decade ago, a vehicle might have had around 100 electronic control units with a few basic chips each. Now you’re looking at a few thousand chips, including sensors, adaptive cruise control, and blind-spot systems.

The memory content alone has gone from roughly $50 to $100 per vehicle five years ago to $100 to $300 today, according to Wilford. And once you add everything up, the broader increase, including components, semiconductors, and supplier markup, can reach $2,000 to $3,000 per vehicle, he adds. And that’s before factoring in the impact of far-reaching tariffs. 

Luxury cars carry lots of chips to support premium features, so they face the biggest hit. Low-cost, entry-level models run on thin margins, leaving manufacturers with little room to absorb higher costs. Midrange shoppers are likely to feel the burden, too, as those costs get passed further up the line. Beyond rising window sticker prices, there have been increases in non-negotiable destination charges as automakers look to adapt.

The people who can easily afford a car are generally buying one, says Patrick Manzi, chief economist at the National Automobile Dealers Association. It’s the people who are less affluent, stretching to purchase a new model, who end up trading down, buying a used car, or agreeing to less favorable loan terms. More than a third of new-vehicle loans now run longer than six years, according to Experian data, as opposed to the five-year terms that were long the norm. Stretching payments over six or seven years keeps the monthly payment manageable, but it means paying more interest and staying upside down on the loan for longer.

“I do believe electronics components are contributing to rising vehicle prices, but I don’t have exact numbers,” Manzi tells CR by email. He points to the higher costs for microchips, screens, and advanced safety features, all of which rely on the same memory and semiconductor supply chain that AI data centers are now raiding.

But, he notes, the average amount people are paying for new cars, after adjusting for inflation, is actually down a bit from its 2022 peak. The real problem for consumers right now is the cost of keeping the cars they have. According to the Bureau of Labor Statistics, the costs of motor vehicle insurance, maintenance, and repair are both up roughly 50 percent since early 2020. Cars packed with sensors and electronic modules simply cost more to fix and insure, and there is a shortage of trained technicians.

Wilford is straightforward in his future outlook. “We have never, ever built our way out of a supply chain crunch,” he says. “Never.” Once memory makers get used to selling leading-edge chips at data-center prices, there’s little reason to focus again on lower-margin chips.

As for the chip shortage, analysts at both Gartner and IDC say it’s likely to last well into 2027 and maybe beyond.

We reached out to OpenAI, Anthropic, and Nvidia for insight, too, but they have not responded to our questions about their hardware refresh cycles and future demand for advanced memory.

There are, however, some practical ways for you to save when shopping for cars and electronic items:

• Look for an older model. You don’t need the latest tech for everyday tasks like browsing the web, email, documents, and spreadsheets. TVs, laptops, and smartphones that are a year or two old often remain in stores after newer models arrive—at meaningfully lower prices. The Samsung Galaxy Watch9 starts at $380, for example, but you can now purchase the Watch8—which performed very well in our labs—for $300 or less.
• Consider refurbished. While this advice doesn’t work equally well for all categories, you might find that purchasing a factory-refreshed or gently used appliance, laptop, or phone can save you money. Apple, Best Buy, LG, Samsung, and others certify the items they resell and even offer new warranties.
• Buy at the right time. For cars, shop toward the end of the model year. And for other items, major sales events (like Labor Day, Prime Day, and Black Friday) continue to offer great bargains. Consumer Reports has a team of deal seekers who round up the best offers. You can find their picks at the CR Deals Hub. And Wilford is planning to buy a used electric vehicle later this year, pointing to a temporary surplus of leases that are ending. He expects that window of opportunity to start closing around 2027 or 2028.
• Use CR for Smart Buys. Check out our ratings for help finding products with a good price and admirable performance. Apple and Samsung sell well-made, budget-friendly phones, for example. (See the iPhone 17e and Galaxy A25 5G.) They’re much less expensive than flagship models but still do almost everything you want a modern smartphone to do. Apple’s new MacBook Neo laptop is a bargain, even with a recent price hike to $699.
• Avoid the upsell. Extra RAM, storage, and AI features that look impressive on the box often deliver little real-world benefit for typical use, and the added cost is hard to justify right now. Try to be selective with the options packages on cars, too, says Wilford, since higher-priced packages frequently add features most drivers rarely use. Buy for the driving you actually do.
• Focus on the real cost. That means zeroing in on the car’s out-the-door price rather than the monthly payment, says Wilford. The same goes for new smartphones. The finance plan may seem doable, but you can save hundreds by selecting an older model and purchasing it outright.