Autobayng News Team
When Tesla rolled out the cheaper Model Y and Model 3 Standard variants in October, the company hoped that the stripped-down models would revive its sagging U.S. sales and bring in cash to fuel its robotaxi and AI dreams. So far, that bet is not paying off.
Welcome to Critical Materials, your daily round-up of news and events shaping the world of electric cars and technology.
Also on the menu today: Ford and battery maker SK On break up their joint venture to make EV batteries in the U.S., and automakers warn against Chinese government-backed automakers and battery investments from entering the U.S., fearing American vulnerability if a confrontation breaks out. Let’s begin.
30%: Why Tesla’s Cheaper Models Are Getting A Cold Reception
2026 Tesla Model 3 Standard
Photo by: Tesla
Both the Model Y Standard and Model 3 Standard come in roughly $5,000 below the Premium trims. The Model 3 Standard starts at around $38,630 with destination and order fees, whereas the Model Y Standard is priced around $41,630. Tesla has aggressively decontented them, shaving off features in the name of affordability.
But more than two months after hitting U.S. showrooms, these budget Teslas haven’t delivered the sales boost the company hoped for. In fact, November turned out to be Tesla’s worst U.S. sales month in four years, Reuters reported on Thursday, citing Cox Automotive data.
Here’s more from that report:
“Demand for Standard versions was expected to support sales in November, but the company’s total sales fell nearly 23% to 39,800 vehicles from 51,513 a year earlier and were the lowest since January 2022, according to the data from Cox, which tracks sales across the industry.”
“The drop certainly shows there is not enough demand for the Standard variants that were supposed to boost sales after the tax credit expiry,” Stephanie Valdez Streaty, Cox’s director of industry insights, said in an interview with Reuters. “What’s also happening is Standard sales are cannibalizing into sales of Premium versions, especially the Model 3.”
To be fair, Tesla isn’t the only automaker fighting EV headwinds right now. The $7,500 tax credit has vanished. Fuel-economy rules have been weakened, nudging automakers back toward combustion models. With the EPA under a Trump administration moving to loosen emissions standards, the policies don’t appear to favor EVs anytime soon.
Unsurprisingly, overall EV sales fell 41% in November. Tesla’s market share, however, jumped to 56.7% from 43.1%. But even that comes with an asterisk: the third quarter effectively stole sales from the final months of the year as buyers rushed to snag the dying tax credit.
Industry leaders and auto execs say the real picture of post-credit EV demand won’t come into focus until the second quarter of next year. Against that backdrop, it’s no shock that Tesla’s half-assed Standard versions aren’t setting the market on fire.
The Model 3 Standard still feels like a decent proposition, starting late $30,000s. The nearly $42,000 Model Y Standard, though, is another story. It comes without lane centering (or Autosteer in Tesla speak), loses the horizontal light bars at both ends and skips FM/AM radio entirely.
It also swaps out the nicer frequency-selective dampers for basic passive ones. And the strangest change of all, Tesla has covered the glass roof with a fabric liner. According to Tesla engineers, adding an actual metal roof would’ve been more expensive.
Here’s more from that report:
“Tesla has a serious challenge on its hands next year when several other automakers are planning to roll out cheaper vehicles that are also full of fun features,” Cox’s Streaty said. “So the answer is that Tesla needs a completely new vehicle in its fleet. Period.”
She’s not wrong. A new and fresh model, preferably on the affordable end of the market, could help Tesla bring in critical revenue. That or a radical leap forward with its Full-Self Driving (FSD) tech to deliver robotaxi revenue or meaningfully higher FSD subscriptions.
Until that happens, it’s unclear how the brand will continue to fuel its AI and robotaxi ambitions. Because don’t forget, Tesla’s bread and butter still comes from the old-fashioned business of selling cars.
60%: Why Automakers Fear Chinese Battery Investment In America
CATL Shenxing Plus LFP battery
The Alliance For Automotive Innovation, a trade group representing major U.S. automakers such as General Motors, Ford, Toyota and Stellantis, asked the Trump administration to further prevent Chinese-government-backed automakers and battery companies from setting shop stateside.
Here’s more from Reuters:
“China poses a clear and present threat to the auto industry in the U.S.,” the group wrote in a statement for a U.S. House hearing on Chinese vehicles.
“No amount of investment by automakers and battery manufacturers operating inside the U.S. can counter a China that is enabled by subsidies to chronically oversupply around the world. This is a recipe for dumping that Congress and the Trump Administration must prevent from happening inside the U.S.,” the auto industry group said.
The group went on to cite national security concerns, claiming that the Chinese government could disable vehicles with Chinese-made software or components in case a major war were to break out between China and the West.
China has leapfrogged the U.S. in producing competitive EVs with cutting-edge software. Last year, the Biden administration proposed severe restrictions on Chinese automotive software and hardware in the U.S. to prevent misuse of the technology. And Chinese-made EVs are also effectively walled off from the U.S. with heavy tariffs.
90%: Ford And SK On Part Ways
SK On Battery Plant In The U.S.
Photo by: SK On
In 2022, Ford and Korean battery giant SK ON, the subsidiary of SK Innovation, decided to invest over $11 billion in two U.S. battery plants for electric vehicles, one in Tennessee and the other in Kentucky.
The companies have now decided to end this joint venture amid slowing EV sales as battery makers now pivot towards stationary energy storage systems, which are still growing much faster than EVs.
As the two companies break up, SK ON will take full ownership of the battery plant in Tennessee, whereas Ford will assume full ownership of the Kentucky plant. SK will continue to grow its focus on ESS batteries, following in the footsteps of other battery makers such as LG Energy Solution and Samsung SDI, which have also been pivoting to ESS as EVs continue riding down a bumpy road.
100%: How Can Elon Musk Turn The Tide For Tesla?
Photo by: Tesla
With rivals preparing cheaper, better-equipped EVs, how long can Tesla coast without launching a new model? Do you think the automaker can turn a profit on its robotaxi and AI businesses anytime soon? Let us know in the comments.
Have a tip? Contact the author: suvrat.kothari@insideevs.com Related Stories We want your opinion! What would you like to see on Insideevs.com? – The InsideEVs team
