Autonomy's Structural Shift: Tesla's Position and the OEM Risk

The path to full autonomy is no longer a solitary sprint. It has transformed into a crowded and increasingly open race, fundamentally challenging the notion of a single winner-take-all outcome. The acceleration is now a multi-year trend, with Level 3 autonomy-where the car handles driving tasks under certain conditions-set for a significant surge over the next five years as major original equipment manufacturers (OEMs) prepare to deploy in-house systems. Stellantis, for instance, has announced the readiness of its STLA AutoDrive 1.0, a Level 3 system, with the Jeep Wagoneer slated to be the first vehicle to offer it. This places the automaker alongside established leaders like Mercedes-Benz and BMW, who have already launched similar technologies in their premium models.

This democratization is being actively fueled by technology platforms like NVIDIA. The company has unveiled the Alpamayo family of open AI models, simulation tools, and datasets designed to accelerate the development of reasoning-based autonomous systems. By releasing these tools openly, NVIDIA is effectively lowering the barrier to entry for competitors, enabling a broader ecosystem of developers and automakers to build and refine their own solutions. This move could accelerate industry-wide progress, spreading the technological burden and potentially compressing the timeline for widespread deployment.

Against this backdrop, Tesla's position faces a clear existential risk. The company's long-term vision and revenue strategy are deeply tied to its proprietary Full Self-Driving (FSD) technology. Yet, its CEO has acknowledged that the competitive pressure from new entrants like NVIDIA's Alpamayo will not materialize for several years. Musk stated it would take many years before Nvidia's new models pose serious competition to Tesla's FSD, with the legacy car companies themselves not likely to design camera and AI systems at scale until years after that. This timeline suggests a window of relative insulation, but it is not indefinite. The race is now a field of contenders, not a lone leader, and the structural shift toward an open, collaborative development model is the most significant change in the landscape.

Tesla's Position: Adoption Strength vs. Valuation Concerns

Tesla's autonomy strategy is showing powerful signs of customer adoption, yet the financial market's patience is wearing thin. The company's proprietary Full Self-Driving (FSD) software is seeing robust uptake, particularly among its premium buyer base. According to Tesla executives, a majority of Model S and Model X customers are now purchasing FSD outright, with a take rate of 50-60%. This deep commitment from affluent buyers is a strong vote of confidence in the technology's perceived value. While the adoption rate for the broader fleet of Model 3 and Model Y vehicles remains in the teens, that figure represents a significant climb from single digits and points to a growing user base essential for refining the system.

Despite this technological promise, a major investor has pulled back, highlighting a stark disconnect between growth narrative and financial reality. Gary Black, who once viewed Tesla as a transformative company akin to early Amazon, has exited his position due to valuation concerns. He explicitly draws a parallel, noting that while he saw Amazon's future infrastructure, he now sees Tesla's stock price running far ahead of his estimates. His critique centers on the accelerating competition, particularly from NVIDIA's open AI platform, which he believes is democratizing autonomy and threatening Tesla's long-term moat. His verdict is clear: "We still like TSLA the company but don't like $TSLA the stock."

This skepticism is reflected in recent market action. After a powerful multi-year run, Tesla's momentum has visibly cooled. The stock has underperformed the broader market, with a 9.1% decline over the past month. This pullback suggests that the market is reassessing the premium it once placed on Tesla's future autonomy potential, weighing it against rising competitive threats and the sheer scale of the investment required to maintain a lead. The high adoption rates are a critical asset, but they are not yet translating into the financial returns the valuation demands.

The OEM "BlackBerry Moment": A Structural Risk

The most profound threat in the autonomy race is not from a single competitor, but from a fundamental shift in value creation. For traditional automakers, the risk is a sudden and severe loss of relevance-a "BlackBerry moment." Investor Gary Black has explicitly warned that OEMs unable to solve for unsupervised autonomy face this fate. The analogy is stark: just as BlackBerry's proprietary software ecosystem was left behind by the open, app-driven platforms of iOS and Android, so too could the hardware-centric business model of legacy carmakers be rendered obsolete by the software-defined value of autonomous driving.

The driver of this structural risk is a clear pivot in profitability and customer lock-in. In the future, the most valuable assets will be the control and data generated by the autonomy stack itself. This is a shift from selling vehicles to selling mobility services and software subscriptions. OEMs that fail to build or acquire this capability risk becoming mere component suppliers, commoditized in a value chain where the real margins are captured by those who own the intelligence layer. The competitive advantage Black identifies is not about product superiority, but about owning the platform that defines the entire experience.

Regulatory progress could accelerate this transition, but it also introduces new vulnerabilities. The proposed SELF DRIVE Act of 2026 aims to standardize safety frameworks with a new federal motor vehicle safety standard. While this could accelerate deployment for compliant players, it raises legal questions for those left behind. The bill's requirement for manufacturers to develop and submit a "safety case" for each automated driving system version creates a formalized hurdle. For OEMs without a viable autonomy strategy, this could become a regulatory barrier to market access, effectively locking them out of the next generation of vehicle sales.

The conditions under which this "BlackBerry moment" materializes are tightening. It requires a convergence of technological readiness, regulatory clarity, and consumer adoption. The act of legislation itself signals that the window for inaction is closing. For OEMs, the choice is no longer about incremental improvement but about existential reinvention. The race is no longer just about who builds the best car, but who controls the software that drives it.

Catalysts and Scenarios: What to Watch

The coming months will test the entire autonomy thesis, separating conviction from speculation. For Tesla, the immediate pressure point is its upcoming earnings report on Jan. 28. This event will be a critical stress test, scrutinizing the company's financial profile against a backdrop of rising competition. Investors will look for concrete evidence that the robust FSD adoption among premium buyers is translating into tangible progress and profitability. Any shortfall in deliveries or a lack of clarity on the path to monetizing autonomy will likely deepen the market's skepticism, which has already led to a 9.1% stock decline over the past month.

Simultaneously, the commercial rollout of Level 3 systems by legacy automakers will provide a real-world demonstration of the in-house OEM threat. The deployment of Stellantis's STLA AutoDrive 1.0 in the Jeep Wagoneer is a key milestone. Its successful launch and customer reception will validate the viability of a hardware-software bundle built by an automaker, directly challenging Tesla's proprietary model. If these systems gain traction, they will pressure Tesla's lead by offering a comparable, integrated experience without the need for a separate software subscription. The broader trend of OEMs like Mercedes-Benz and BMW already in the market, and Chinese players like BYD and XPeng preparing to follow, underscores that the race is no longer about a single pioneer but a field of contenders.

Finally, the trajectory of NVIDIA's open platform will be a major structural catalyst. The company's Alpamayo family of open AI models and tools is designed to accelerate development across the industry. Watch for partnership announcements with major mobility leaders, as adoption by Tier 1 suppliers or OEMs would signal a shift toward a de facto standard. This could democratize autonomy further, reducing the first-mover advantage for any single player and altering the competitive calculus for Tesla. The bottom line is that the path forward is becoming clearer through these near-term events. The earnings report will reveal Tesla's current health, the Level 3 rollouts will show the strength of the OEM challenge, and NVIDIA's partnerships will indicate whether the industry is converging on an open, collaborative future.