Tesla stock (NASDAQ: TSLA) fell sharply on Tuesday as investors digested Nvidia CEO Jensen Huang’s sweeping autonomous-driving push at CES 2026.
The chipmaker unveiled Alpamayo, an open-source AI model family designed to tackle the “long-tail” problems that have long been the hardest challenge in self-driving technology.
Mercedes-Benz seems set to deploy Alpamayo-powered systems in the first quarter, and Uber, Lucid, and Jaguar Land Rover are also signaling interest.
Tesla stock came under pressure as Wall Street is suddenly asking whether Nvidia’s well-capitalised approach could narrow Tesla’s autonomous advantage faster than expected.
Why Nvidia’s announcement threatens Tesla’s narrative
Nvidia’s Alpamayo platform marks the company’s formal entry into the autonomous-vehicle software business, not just as a chip supplier, but as a full-stack solutions provider.
The Alpamayo 1 model, a 10-billion-parameter vision-language-action (VLA) system, uses what Huang called “chain-of-thought” reasoning to approach driving as a human would.
This explainability angle is crucial as it appeals directly to legacy automakers and regulators who worry about the opacity of Tesla’s end-to-end neural networks.
Supporting Alpamayo is a full ecosystem: AlpaSim, an open simulation framework for testing rare scenarios; 1,700+ hours of real-world driving data covering 25 countries; and pre-trained models available freely on Hugging Face and GitHub.
Nvidia positioned this as a data-efficient alternative to Tesla’s fleet-learning approach, arguing that reasoning-based models can reach high accuracy without requiring millions of miles of live-car telemetry.
The timeline matters to investors.
Mercedes’ CLA will ship with Alpamayo in the US this year, Lucid and JLR are onboarding, and Uber is actively exploring Level 4 robotaxi pilots with the platform.
For a company that has traded on near-monopoly control of autonomous driving for years, Tesla suddenly faces credible, well-funded competition, not from a startup, but from the GPU giant that powers its own AI chips.
Tesla stock: Delivery crisis and the valuation time bomb
Tesla’s near-term business is crumbling. German car sales collapsed nearly 48% in December 2025 compared to December 2024, with full-year German registrations down 48.4% to just 19,390 units.
This is especially brutal because the German EV market itself grew 43.2% in 2025, and Tesla is losing share in an expanding market.
France saw registrations plunge 66% last month; Sweden fell 71%; Belgium dropped 53%.
Globally, Tesla delivered 1.64 million vehicles in 2025, a 9% drop from 2024, and surrendered its crown as the world’s largest EV maker to China’s BYD.
For the fourth quarter, Tesla missed Wall Street delivery forecasts, and analysts now expect 3% revenue contraction and a nearly 40% earnings-per-share drop for 2025.
The valuation logic is straightforward: much of Tesla’s trillion-dollar market cap rests on the assumption that a robotaxi business built on autonomous driving will become the company’s dominant profit engine by 2027.
Elon Musk has repeatedly downplayed near-term vehicle sales as “less critical,” betting everything on FSD and humanoid robots.
But if Nvidia, Mercedes, and a coalition of traditional automakers can accelerate Level 4 deployment via Alpamayo, that future cash flow, the entire bull case is suddenly at risk.
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