India’s electric vehicle industry is facing a new supply chain challenge as the global AI boom drives up demand and prices for memory components.

India’s Electric Vehicle industry is beginning to feel the heat of the AI-led surge in global memory prices.

Speaking to businessline, manufacturers and other industry observers suggest that the booming demand from data centres has led to shortages in the supply of RAM and an increase in overall input costs.

Niraj Rajmohan, co-founder and CTO at Ultraviolette, told businessline recently that demand for memory from AI data centres has created a new, largely unanticipated supply chain challenge.

He added that memory prices have shot up by ‘tens of dollars’ and, unlike the normal fluctuations, this time manufacturers have redirected their entire focus towards data centres. “Since memory is a key part in the active electronic components of EVs, the price surges have resulted in a spike in input costs,” he said.

Dinesh Arjun, co-founder & CEO of electric motorcycle maker Raptee.HV suggested that RAM and storage are key components in smart EVs with software-driven features.

“Most EVs today essentially function like a ‘mini computer on wheels’ with features like a touch screen interface, maps and navigation, connectivity and other software controlled performance features. These features will need a processor, RAM and storage to run,” he said.

Raptee’s motorcycles, for instance, use a quad-core processor with 2GB RAM and 8GB storage, he added. He suggests that higher prices have pushed the cost of these components by about 5 per cent.

Semiconductor content in EVs continues to rise

Vasudha Madhavan, Founder & CEO, Ostara Advisors, a climate-tech investment banking firm,, suggests that though chips and memory contribute a small portion of the overall cost of EVs, this share is growing rapidly.

“An EV carries two to three times the semiconductor content of a petrol car, and memory accounts for a small but significant fraction of the overall cost. For instance in a motor control system worth ₹75,000 the cost of semiconductor chips would be around ₹20,000 which includes memory,” she said.

Automakers face competition from AI and smartphone sectors

Meanwhile, the difference in volumes procured by automakers and other large customers adds to the crisis.

Raptee’s Arjun says that automobile manufacturers purchase far lower volumes of RAM than smartphone makers and data centres, naturally pushing them to prioritise customers with large orders.

In fact, US-based Micron announced the shutdown of its consumer RAM vertical in February of this year and redirected manufacturing capacity toward more profitable high-bandwidth memory (HBM) required for AI data centres.

Rising component costs squeeze EV makers

The increase in memory prices, when coupled with upticks in rare-earth magnet prices and other commodity costs, has led EV companies to record a significant rise in their overall bill of materials.

In a recent earnings call, Ather CEO Tarun Mehta said that FY26 saw major supply chain challenges. “What hit us were three big things, which are rare earth magnet prices, the spike in memory costs across the entire world, and the spike in lithium-ion battery prices because of commodity inflation,” he said.

Published on June 16, 2026