Nvidia’s expanding focus on “Physical AI” is prompting renewed debate over how quickly traditional automakers can narrow the autonomy gap with Tesla, according to fresh analysis from Morgan Stanley.
Analyst Andrew Percoco said Nvidia’s keynote at CES placed autonomous vehicles and humanoid robotics at the center of attention, with the newly unveiled Alpamayo system emerging as a key highlight.
Morgan Stanley described Alpamayo as NVIDIA’s vision-language-action (VLA) model, built to address the “long tail” of autonomous driving edge cases. The platform is supported by AlpaSim and more than 1,700 hours of driving data, giving automakers tools to tackle complex real-world scenarios.
According to the bank, the Alpamayo stack is designed to accelerate original equipment manufacturers toward scalable, reasoning-based autonomy, a shift that could reshape competition across advanced driver-assistance and self-driving technologies.
The analysts said Alpamayo helps legacy automakers stay competitive in autonomous vehicles, increasing pressure on Tesla not only in electric vehicles and humanoid robotics, but also in the global race toward full autonomy.
Despite this, Morgan Stanley reiterated that Tesla remains years ahead of rivals in autonomy, citing its vertical integration, vast data advantage, scale, and cost efficiency as key differentiators.
The report added that Nvidia’s progress does not materially alter Morgan Stanley’s outlook on Tesla, as its base case already assumes broad industry adoption of Level 2+ and FSD-equivalent systems over the next decade.
While Nvidia offers automakers a capital-efficient pathway into advanced autonomy, the bank cautioned that building and integrating a complete autonomous vehicle stack remains a long-term process measured in years rather than months.
In humanoid robotics, Nvidia’s tools could shorten early-stage training cycles. However, Morgan Stanley said Tesla is still likely to maintain an edge due to its superior integration and manufacturing capabilities.
