Tesla is expected to finally deliver on its promise of an even more affordable model today. And while it might not be the $25,000 EV that everyone that everyone was hoping Tesla would produce, the vision of might at least look similar… if you squint real hard and ignore the price tag.
The head of Tesla’s German factory has let a bit slip about the upcoming car, including the potential price and some of the expected features. It’s time to recap what we expect out of Tesla’s announcement today.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Also on deck: Xiaomi is taking on Western brands with a new offering and Tesla stands accused of mishandling insurance claims in California. Let’s jump in.
30%: Tesla’s Affordable Model Y Is Due Today
Tesla’s affordable vehicle, a slimmed-down version of its best-selling Model Y, is expected to be revealed today. Tesla has been teasing it pretty hard on social media lately, plus, it’s been spotted driving around without camo already. But what exactly will come out of the announcement is still anybody’s guess.
However, a few more details have leaked courtesy of Tesla’s German factory boss, Andre Thierig, according to German news outlet Handelsblatt. In its recent report, the outlet revealed that Tesla’s new affordable Model Y is expected to be around 10% cheaper and will begin production within the next few days.
Here’s the latest from Handelsblatt:
Tesla plans to launch a light version of its Model Y this year. German CEO André Thierig announced this at an internal event on Monday at the Tesla plant in Grünheide. Series production and delivery will begin “in a few weeks.”
The Model Y Standard has a “completely redesigned front, completely new bumpers, a completely redesigned rear, and different lights. It simply looks like a different car,” Thierig said at the launch. Regarding the planned price, the plant manager said: “It will be about ten percent cheaper than the current Model Y.”
Previous leaks suggest that Tesla will manage to cut its price by slimming down on the Model Y’s premium features. This could mean downgrading the car with cloth seats, a less robust audio system, simplified suspension, plus revisions to its exterior, like removing the front light bar and switching to an all-metal roof.
A 10% price reduction would mean that Tesla’s cheaper Model Y would start right around the $40,000 mark. For U.S. buyers, the leaked price change would still not be quite as good a deal compared to the price after the $7,500 tax credit (which is no longer available), especially as cheaper competitors like the new Nissan Leaf and Chevy Bolt are set to shake up the game.
Analysts described the move as a “way to have a lower-cost product without actually investing in a brand-new product.” They also anticipate that it could potentially cannibalize sales of the mid-range Model Y trims, but potentially bridge the gap for buyers who may no longer be able to afford the car, thanks to the tax credit going away.
We’re keeping an eye out for Tesla’s announcement on the new affordable Model Y Standard, so stay tuned to learn all about it as soon as we do.
60%: Xiaomi Sets Sights On The West’s Luxury Brands
Photo by: Xiaomi
There’s a new feud brewing in the auto industry. It’s not Detroit and Wolfsburg or even Modena and Molsheim squaring up. Instead, it’s one of Stuttgart’s most premium brands and a newcomer from Beijing.
Xiaomi is finding its newfound status as an automaker quite lucrative. The company’s SU7 electric sedan and recently-launched YU7 SUV have made a pretty big splash in China, and buyers who have been eyeing premium Western luxury brands are changing course and buying something homegrown. Xiaomi wants to capitalize on that by reeling in buyers who want something more personalized.
The SU7 Ultra gets a treatment similar to Porsche’s Exclusive Manufaktur program. The gotcha is that it requires add-ons of at least $14,000, bringing the price of the SU7 Ultra up to nearly $90,000. But it can go much higher depending on the levels of customization that the buyer wants. This means choosing from exclusive paint colors, custom shades of Alcantara in the interior, carbon fiber galore, 24-karat badging and so much more.
Bloomberg chimes in on how the program could translate to success for Xiaomi:
The analyst cautioned that Xiaomi’s push might not attract every potential Porsche owner. “Xiaomi cars are competing more directly with Audi, BMW or Mercedes,” Hendrikse said. Selling more add-ons isn’t guaranteed to boost business either, he added. “Best case we’re talking about between 1% to 2% of global revenues.”
Still, it’s clear that Xiaomi is encroaching on the territory of Western premium brands. The amethyst purple color option the automaker has unlocked for its customization program takes around 50 hours to apply and includes hand polishing, Lei said.
“Without being humble, this paint job is comparable to that of Rolls Royce or Bentley,” he said. “I want more people to be able to enjoy the service that comes with top-range luxury cars.”
Needless to say, Western automakers (especially luxury brands like Porsche) are quickly finding out that they’re facing a real threat from China’s newest EV brands like Xiaomi. Whether it be beating the brand on the track or commandeering customers, these new brands have found that emotion is an easy upsell.
The concept might sound absurd, especially when Porsche still feels like it lives in a different price bracket than Xiaomi, but so did the idea of an electric Porsche just a few years ago. And now Porsche faces a very real threat in one of its most important markets—Xiaomi’s newest development is just the industry’s cherry on top.
90%: Regulators Accuse Tesla of ‘Egregious’ Mishandling of Insurance Claims
Photo by: Martin Katler/Unsplash
When Tesla announced that it was going to make its cars more affordable by taking on big insurance in 2019, owners celebrated. See, insurance costs on Teslas are notoriously high—bordering on egregious, even. But what’s really egregious, according to the California Department of Insurance (CDI), is just how Tesla has been handling claims since its insurance arm went live.
The CDI issued enforcement actions against Tesla Insurance Services, Tesla Insurance Company, and State National Insurance (which underwrites Tesla’s policies) on Friday. The regulators claim that it has observed “repeated failures to comply with long-standing claims handling laws,” including the failure to conduct “thorough, fair and objective investigations of claims.”
Engadget reports on the warning notice issued by the CDI:
According to the filing, the CDI received 97 complaints about State National in 2022 and determined that 21 were justified, while also noting that the insurance provider committed 40 violations of the state’s insurance regulations.
The numbers skyrocketed over the years, eventually hitting 1,095 received complaints about State National, which were boiled down to 415 justified complaints between January 1, 2025 and September 22, 2025. Within this year’s complaints so far, the CDI said that State National committed 1,498 violations of the state’s insurance code.
As for Tesla Insurance, the CDI received 842 complaints and said that 166 of which were justified in the same time period. The agency also accused Tesla of committing 532 violations. On top of the violations, the state agency claimed that Tesla Insurance’s Head of Claims position was left vacant for several months, and when eventually filled, saw frequent turnover between April 2023 and May 2025.
The regulatory body is essentially saying that the actions from the three companies have resulted in “significant harm” to Tesla owners who held policies through the firms. In fact, they note that the pattern of misconduct is so severe that California could fine the company $10,000 per willful violation and may even suspend or revoke the company’s licenses.
We’ve seen a number of complaints about Tesla Insurance on Reddit as well. Some posters have called it the “worst company [they’ve] ever interacted with,” while others have said they’ve needed to file complaints with the state in order to receive settlement letters. Plenty have openly said they would be switching from Tesla to other companies after poor interactions and others have posted photos of being on hold with insurance for anywhere from three hours to five hours while trying to get in touch with an agent.
It’s kind of ironic (and sad) to see. Tesla went down this road because traditional insurance companies didn’t understand EVs and charged wild premiums for its cars. But in the end, it’s apparent that Tesla might not have a true grasp on the insurance industry. Maybe vertical integration works for Tesla’s EV production, but it may not work as well for full-stack ownership, at least not yet.
100%: What’s the Magic Price For The Affordable Model Y to Be Competitive?
Photo by: Tesla
It’s clear that Tesla’s $25,000 EV isn’t happening. Elon Musk openly said that a car that cheap would be “silly” and “pointless,” so the next best thing is naturally a slightly more expensive model that Tesla can still turn a profit on.
Now, Tesla hasn’t announced a price on the Model Y Standard at the time of writing, but if its German factory head is to be believed, the 10% discount would put it in the neighborhood of $40,000. Which is decent, but nothing groundbreaking.
What’s the magic number that it should really aim for to remain aggressive in an increasingly competitive market? Let me know your thoughts in the comments.
