The burgeoning artificial intelligence sector is creating a new threat to the automotive industry, potentially triggering a shortage of critical computer chips. This development comes as the sector grapples with increased demand for advanced computing power, impacting the availability of essential components for vehicle manufacturing. This report also examines California’s significant milestone in zero-emission vehicle sales and a new, strict e-bike law enacted in New Jersey.
AI’s Unquenchable Thirst for Chips
A potential shortage of Dynamic Random-Access Memory (DRAM) chips is looming for the automotive industry, with artificial intelligence applications being identified as the primary driver. The insatiable demand from AI data centers for high-performance chips is expected to strain the global supply of silicon wafers, a fundamental material used in semiconductor production.
While automakers utilize less advanced memory chips compared to those powering AI servers, both sectors rely on the same constrained wafer supply. According to S&P Global Mobility, chipmakers are likely to prioritize higher-margin clients in the AI sector, potentially leaving automotive manufacturers to compete for limited resources. This shift could lead to a significant increase in chip prices for car companies, with some projections indicating a potential doubling of costs.
Analysts from UBS, as reported by Bloomberg, suggest that automakers heavily reliant on electronic components, such as Tesla and Rivian, are more exposed to this emerging shortage than traditional manufacturers like GM and Ford. A repeat of the pandemic-induced chip crisis could once again disrupt vehicle production and inflate prices at a time when the cost of new vehicles is already at historically high levels.
New Jersey Implements Strict E-Bike Regulations
Responding to a rise in e-bike-related accidents, including fatalities, New Jersey Governor Phil Murphy has signed a new law imposing stringent regulations on electric bicycles. The legislation, which took effect on Monday, establishes the most restrictive e-bike rules in the nation. Key provisions include mandatory registration and insurance for e-bikes, along with a requirement for riders to be licensed. Crucially, the law prohibits riders under the age of 15.
Advocates argue that the new law fails to differentiate between standard e-bikes and high-powered, fast vehicles often used illegally on public roads. Critics contend that this broad approach could stifle the adoption of a transportation mode that offers a viable alternative to car travel and helps reduce emissions. The measure is seen by some as a reaction to the growing popularity of e-bikes, particularly among younger demographics.
California Surpasses 2.5 Million Zero-Emission Vehicle Sales
California has reached a significant milestone, announcing that cumulative sales of zero-emission vehicles (ZEVs) in the state have surpassed 2.5 million by the end of 2025. The precise figure reported is 2,551,121 ZEVs, comprising nearly 2 million battery-electric vehicles (BEVs) and a combination of plug-in hybrid electric vehicles (PHEVs) and a small number of hydrogen fuel cell vehicles.
This achievement underscores the strong momentum of vehicle electrification, even amidst varied federal policies and broader market uncertainties. California continues to dominate the U.S. EV market, accounting for approximately a quarter of all full-electric vehicle sales nationwide last year. In 2025, ZEVs represented 22.9% of all new light-duty vehicle sales in the state. Even in the fourth quarter of 2025, following a post-tax-credit market adjustment, California maintained an 18.9% ZEV market share, indicating sustained consumer interest and adoption.