Will the AI revolution live up to the hype? That’ll be the biggest tech story of 2026. In the meantime, the industry is making things hard for car companies—in a rather unlikely way.
Welcome back to Critical Materials, your go-to daily roundup of the news driving the future of transportation. This morning: A new chip shortage is brewing, California passes an EV sales milestone, and a controversial e-bike law just hit the books in New Jersey.
Let’s get into it.
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25%: Remember The Chip Shortage?
Xiaomi factory
Photo by: Getty Images
If you’ve basically blocked out everything related to the COVID era like I have, allow me to jog your memory. The global pandemic snarled supply chains, hitting the supply of semiconductors particularly hard. This was bad because these chips go into just about all consumer electronics, and you need hundreds of them to make a modern car.
Auto production slowed to a crawl. The aftershocks of the extremely limited supply of cars are still being felt, especially if you look at how expensive new cars still are to this day.
The bad news: A new chip crisis is brewing. This time around it’s AI’s fault. The tech industry’s unstoppable appetite for chips to put in their data centers is expected to crimp supply for the car business, Bloomberg reported on Tuesday, citing some analyst reports.
Here’s the outlet with the details:
The specific type of semiconductors at issue are dynamic random-access memory chips, known as DRAM. While automakers and their parts manufacturers depend on older, less-advanced memory chips than those going into AI servers and data centers, both rely on constrained supply of silicon wafers.
With demand for higher-end memory chips soaring, the car industry must act fast to shore up sourcing strategies.
According to a report from S&P Global Mobility, the DRAM shortage will make chipmakers prioritize higher-margin customers rather than car companies. That will leave carmakers fighting for scraps, and they could see prices jump by up to 100%.
Analysts from UBS said car companies that are more reliant on electronics components are the most exposed, per Bloomberg. The analysts reckon that Tesla and Rivian are more at risk here than, say, GM or Ford.
If the pandemic-era chip crisis is any guide, a semiconductor shock 2.0 that cuts auto manufacturing capacity and increases input costs could raise vehicle prices at a time when cars already cost more than ever.
50%: New Jersey’s E-Bike Crackdown
Riese & Müller Carrie E-Bike
Photo by: Maddox Kay/InsideEVs
Nothing makes me happier than seeing young parents here in the Bay Area shuttling their kids around on electric bikes. That’s one less car on the road, clogging up streets, causing accidents or—in the case of combustion vehicles—polluting the air.
E-bikes are the quickest, most fun, and healthiest way to get around many cities. They now come in all sorts of different form factors, from svelte commuter bikes to big-binned grocery haulers. By and large, I think their boom in popularity in recent years is great for society.
Not everybody thinks so. Responding to e-bike crashes in the state, including some fatal ones, New Jersey Governor Phil Murphy signed a law cracking down on the two-wheelers on his last day in office on Monday.
The law is now the most restrictive e-bike law in the country, requiring e-bikes to be registered and insured and their riders to be licensed. That means no riders under the age of 15. The new law is the latest sign of growing backlash to e-bike use, especially among children and teenagers.
But the measure ignores the fact that many young people getting into trouble on e-bikes are riding high-powered, high-speed vehicles that aren’t street-legal without a license anyway. Bike advocates are criticizing the move. And it will likely slow down adoption of a transportation mode with proven power to replace car trips and cut down on transportation emissions.
75%: 2.5 Million ZEVs
California still leads the U.S. in EV sales. (Chart includes both battery-electric and plug-in hybrid vehicles.)
Photo by: California Energy Commission
California on Tuesday announced a milestone: over 2.5 million zero-emission vehicles cumulatively sold in the state by the end of 2025. To be more precise: 2,551,121. That number includes nearly 2 million battery-electric vehicles, with the rest made up of plug-in hybrids and a small number of hydrogen cars.
It’s a strong signal that despite policy chaos at the federal level and a shaky atmosphere more broadly, progress on transportation electrification has come a long, long way. And it’s still chugging along, especially in places with strong local incentives and interest. California still makes up an outsized share of the U.S. EV market, with roughly a quarter of the country’s full-electric car sales happening there last year.
In 2025, Californians bought some 408,000 ZEVs, good enough for a 22.9% market share of new light-duty vehicle sales in the state. In the fourth quarter, when the post-tax-credit shock set in, California still had an 18.9% ZEV share. Not too shabby.
100%: E-Bikes. Yea Or Nay?
I’ve made my thinking clear. What’s your opinion on e-bikes and the right way to regulate them?
Contact the author: Tim.Levin@InsideEVs.com
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