Nvidia (NVDA) has announced a new partnership with Mercedes-Benz to begin development of its own autonomous vehicles. At his CES 2026 presentation, Nvidia CEO Jensen Huang unveiled the chipmaker’s new Alpamayo open-source artificial intelligence (AI) models specifically designed for training autonomous vehicles and improving full self-driving capabilities. He went on to announce Mercedes as the vehicle manufacturer and receiver of these new chip models.

“This is our first Nvidia first entire stack endeavor,” Huang said about the partnership in his presentation. “We’ve been working on it for this entire time, and I’m just so happy that the first AV car from Nvidia is going to be on the road in Q1.” He also went on to add: “There’s no question in my mind now that this is going to be one of the largest robotics industries, and I’m so happy that we worked on it. And it taught us an enormous amount about how to help the rest of the world build robotic systems.”

The new Alpamayo AI chips will allow cars to “think through rare scenarios, drive safely in complex environments, and explain their driving decisions,” Huang claimed. Nvidia’s chips have helped power the AI revolution, though so far attention has mostly been focused on the software it powers, such as ChatGPT. However, leading tech firms are now increasingly looking for hardware, including Mercedes.

Furthermore, Huang’s presentation also featured a video demonstration of the AI-powered Mercedes-Benz driving through San Francisco while a passenger sat behind the steering wheel, keeping their hands in their lap.”It drives so naturally because it learned directly from human demonstrators,” Huang said, “but in every single scenario… it tells you what it’s going to do, and it reasons about what it’s about to do.”

The move to incorporate Nvidia’s AI technology could put a target on the backs of Elon Musk’s Tesla (TSLA). The latter has pushed hard towards being the leader of autonomous vehicles. However, lacking Nvidia’s powerful and highly rated AI chips, Tesla could fall behind Mercedes. The one thing that Elon Musk’s EV giant has going for it is the popularity of Tesla models and its abundance of models already ready for consumers.