Tesla's shares dropped around 3% on Tuesday following Nvidia's announcement of new open-source AI models for autonomous driving. The 'Alpamayo family' aims to enable humanlike thinking in vehicle decision-making. Investors reacted amid concerns over intensifying competition in the self-driving sector.
Nvidia unveiled the 'Alpamayo family' of AI models on Monday at CES 2026, introducing reasoning-based vision language action models designed to process sensor input and reason about actions like steering, braking, and acceleration. CEO Jensen Huang stated, 'Not only does it take sensor input and activates steering wheel, brakes and acceleration, it also reasons about what action it is about to take.' He emphasized that while Waymo and Tesla possess strong in-house systems, Nvidia is providing the technology 'for everyone else.'
Huang added, 'Our vision is that, someday, every single car, every single truck will be autonomous, and we’re working toward that future.' The first implementation will appear in the Mercedes-Benz CLA on the NVIDIA DRIVE platform, with AI-defined driving arriving in the US this year. By making the models open-source, Nvidia enables manufacturers like Lucid, Mercedes-Benz, and BYD to develop features rivaling Tesla's Full Self-Driving (FSD) technology, potentially challenging Tesla's market position.
Ross Gerber, CEO of Gerber Kawasaki Wealth and an early Tesla investor, commented on X that competitors have 'surpassed Tesla's technology advantage,' attributing this to Elon Musk's time focused on government matters. Gerber praised Nvidia's approach using vision and radar for safety redundancy and predicted autonomy as a standard vehicle feature this decade. He suggested Tesla should offer FSD for free to boost sales. Musk responded that Tesla is already achieving similar capabilities, noting the challenge lies in the 'long tail' of edge cases beyond 99% reliability.
Tesla's robotaxis face scrutiny over issues like traffic violations and crashes. Meanwhile, Nvidia shares rose 1.3% on Tuesday, reflecting positive market sentiment toward the chipmaker's advancements.
