Tesla shares experienced a significant downturn on Tuesday, January 6, 2026, as the market reacted to NVIDIA’s aggressive move into the self-driving sector. The sell-off, which saw the stock drop roughly 5% to close at $430.87, was triggered by the unveiling of “Alpamayo”—an open-source AI platform that threatens to dismantle Tesla’s long-held competitive advantage in autonomous driving.
NVIDIA Challenges Tesla with Open-Source “Alpamayo”
At CES 2026 in Las Vegas, NVIDIA CEO Jensen Huang introduced the Alpamayo family of models, describing it as a “ChatGPT moment for physical AI.” Unlike Tesla’s “black box” proprietary system, Alpamayo is designed to be transparent and accessible:
- Humanlike Reasoning: The platform features a 10-billion-parameter vision-language-action (VLA) model that uses “chain-of-thought” reasoning to handle rare or complex road scenarios.
- Open Ecosystem: NVIDIA is hosting the model weights on Hugging Face and providing over 1,700 hours of real-world driving data to help other automakers catch up.
- First Deployment: The technology is set to debut in the Mercedes-Benz CLA in early 2026, with companies like Lucid and BYD also expected to leverage the tech.
Musk Responds to the Competitive Shift
Tesla CEO Elon Musk took to X (formerly Twitter) to address the news. While he expressed hope for NVIDIA’s success, he remained skeptical about the immediate threat:
“What they will find is that it’s easy to get to 99% and then super hard to solve the long tail of the distribution.”
Musk argued that it would take legacy automakers at least five to six years to integrate the necessary hardware and cameras at the scale Tesla has already achieved.
Analysts Divided on Tesla’s Future
The stock’s decline comes on the heels of weak Q4 delivery data. Tesla reported delivering 418,227 vehicles—a 16% year-over-year drop and its second straight year of declining sales.
| Analyst | Rating | Price Target | Key Argument |
| Ruben Roy (Stifel) | Buy (NVDA) | $250 | Open-sourcing the “science” expands the market for NVIDIA hardware. |
| Edison Yu (Deutsche Bank) | Buy (TSLA) | $470 | Tesla’s robotaxi unit alone could be worth $1 trillion by 2035. |
While some analysts see NVIDIA’s move as a “valuation time bomb” for Tesla’s AI narrative, others believe Tesla’s massive fleet data still gives it a formidable edge in the race for Level 4 autonomy.
