Semiconductor Chips in Cars to Hit $1200 by 2030 – Will Your Car Get More Expensive?

The cost of semiconductor chips used in vehicles is projected to double to around $1,200 per unit by 2030, driven by the rapid adoption of advanced automotive technologies, according to NITI Aayog.

The government’s policy think tank attributes the rising semiconductor value per vehicle to the growing integration of electric drivetrains, autonomous features, sophisticated infotainment systems, and other high-tech components. Currently, chips account for approximately $600 in an average vehicle.

In its latest review, NITI Aayog highlighted that with the industry transitioning towards electric, connected, and smart mobility solutions, the need for high-performance chips will increase substantially.

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“With the growing presence of battery-powered vehicles, advanced driver-assistance systems (ADAS), and vehicle-to-everything (V2X) communication, the role of semiconductors is becoming more pivotal than ever,” the agency said in its statement.

The report also underscored the lessons learned during the global semiconductor shortage triggered by the COVID-19 pandemic, which exposed vulnerabilities in India’s automotive supply chain and highlighted the need for a more self-reliant approach.

To meet the burgeoning demand for semiconductors, the think tank stressed the urgency of developing domestic manufacturing capacity and investing in R&D capabilities.

The government has already introduced the Production Linked Incentive (PLI) scheme to attract investments in semiconductor fabrication and infrastructure.

Industry analysts say that while higher semiconductor costs could push up vehicle prices, the long-term value—through enhanced safety, efficiency, and user experience—justifies the investment.

“Carmakers will likely pass on some of the added costs to consumers,” said Puneet Gupta, Director at S&P Global Mobility, adding, “However, the efficiencies and functionalities brought by technology could help offset the impact.”

India, one of the fastest-growing automotive markets globally, is well-positioned to play a significant role in the evolving EV and semiconductor landscape—provided the right investments and policies align, the report concluded.

India, one of the fastest-growing automotive markets globally, is well-positioned to play a significant role in the evolving EV and semiconductor landscape—provided the right investments and policies align, the report concluded.