diff --git a/bun.lock b/bun.lock
index b3f2e7a49..d2a6f0e94 100644
--- a/bun.lock
+++ b/bun.lock
@@ -20,6 +20,7 @@
         "ai": "^6.0.105",
         "canvaskit-wasm": "^0.40.0",
         "culori": "^4.0.2",
+        "dedent": "^1.7.1",
         "fflate": "^0.8.2",
         "fzstd": "^0.1.1",
         "reka-ui": "^2.8.2",
@@ -492,6 +493,8 @@
 
     "decode-named-character-reference": ["decode-named-character-reference@1.3.0", "", { "dependencies": { "character-entities": "^2.0.0" } }, "sha512-GtpQYB283KrPp6nRw50q3U9/VfOutZOe103qlN7BPP6Ad27xYnOIWv4lPzo8HCAL+mMZofJ9KEy30fq6MfaK6Q=="],
 
+    "dedent": ["dedent@1.7.1", "", { "peerDependencies": { "babel-plugin-macros": "^3.1.0" }, "optionalPeers": ["babel-plugin-macros"] }, "sha512-9JmrhGZpOlEgOLdQgSm0zxFaYoQon408V1v49aqTWuXENVlnCuY9JBZcXZiCsZQWDjTm5Qf/nIvAy77mXDAjEg=="],
+
     "defu": ["defu@6.1.4", "", {}, "sha512-mEQCMmwJu317oSz8CwdIOdwf3xMif1ttiM8LTufzc3g6kR+9Pe236twL8j3IYT1F7GfRgGcW6MWxzZjLIkuHIg=="],
 
     "dequal": ["dequal@2.0.3", "", {}, "sha512-0je+qPKHEMohvfRTCEo3CrPG6cAzAYgmzKyxRiYSSDkS6eGJdyVJm7WaYA5ECaAD9wLB2T4EEeymA5aFVcYXCA=="],
diff --git a/package.json b/package.json
index 5536afaae..a9564931d 100644
--- a/package.json
+++ b/package.json
@@ -37,6 +37,7 @@
     "ai": "^6.0.105",
     "canvaskit-wasm": "^0.40.0",
     "culori": "^4.0.2",
+    "dedent": "^1.7.1",
     "fflate": "^0.8.2",
     "fzstd": "^0.1.1",
     "reka-ui": "^2.8.2",
diff --git a/src/components/ChatPanel.vue b/src/components/ChatPanel.vue
index 8e8a82035..f5ca1f7a4 100644
--- a/src/components/ChatPanel.vue
+++ b/src/components/ChatPanel.vue
@@ -1,30 +1,23 @@
 <script setup lang="ts">
 import { ScrollAreaRoot, ScrollAreaScrollbar, ScrollAreaThumb, ScrollAreaViewport } from 'reka-ui'
-import { computed, nextTick, ref, watch } from 'vue'
+import { computed, markRaw, nextTick, ref, watch } from 'vue'
 
 import APIKeySetup from '@/components/chat/APIKeySetup.vue'
 import ChatInput from '@/components/chat/ChatInput.vue'
 import ChatMessage from '@/components/chat/ChatMessage.vue'
 import { useAIChat } from '@/composables/use-chat'
 
-import type { DesignMessage } from '@/composables/use-chat'
 import type { Chat } from '@ai-sdk/vue'
+import type { UIMessage } from 'ai'
 
-const { isConfigured, createChat } = useAIChat()
+const { isConfigured, ensureChat } = useAIChat()
 
-const chat = ref<Chat<DesignMessage> | null>(null)
+const chat = ref<Chat<UIMessage> | null>(null)
 const messagesEnd = ref<HTMLDivElement>()
 
 const messages = computed(() => chat.value?.messages ?? [])
 const status = computed(() => chat.value?.status ?? 'ready')
 
-function ensureChat() {
-  if (!chat.value && isConfigured.value) {
-    chat.value = createChat()
-  }
-  return chat.value
-}
-
 function scrollToBottom() {
   nextTick(() => {
     messagesEnd.value?.scrollIntoView({ behavior: 'smooth', block: 'end' })
@@ -34,9 +27,11 @@ function scrollToBottom() {
 watch(messages, scrollToBottom, { deep: true })
 
 function handleSubmit(text: string) {
-  const c = ensureChat()
-  if (!c) return
-  c.sendMessage({ text })
+  if (!chat.value) {
+    const c = ensureChat()
+    if (c) chat.value = markRaw(c)
+  }
+  chat.value?.sendMessage({ text }).catch(() => {})
 }
 
 function handleStop() {
diff --git a/src/components/PropertiesPanel.vue b/src/components/PropertiesPanel.vue
index d487de6ff..0a7ad2506 100644
--- a/src/components/PropertiesPanel.vue
+++ b/src/components/PropertiesPanel.vue
@@ -48,7 +48,12 @@ const { activeTab } = useAIChat()
         <DesignPanel />
       </TabsContent>
 
-      <TabsContent value="ai" class="flex min-h-0 flex-1 flex-col">
+      <TabsContent
+        value="ai"
+        class="flex min-h-0 flex-1 flex-col"
+        :force-mount="true"
+        :hidden="activeTab !== 'ai'"
+      >
         <ChatPanel />
       </TabsContent>
     </TabsRoot>
diff --git a/src/components/chat/ChatMessage.vue b/src/components/chat/ChatMessage.vue
index 481d00680..1aca7d77d 100644
--- a/src/components/chat/ChatMessage.vue
+++ b/src/components/chat/ChatMessage.vue
@@ -3,11 +3,11 @@ import { CollapsibleContent, CollapsibleRoot, CollapsibleTrigger } from 'reka-ui
 import { Markdown } from 'vue-stream-markdown'
 import 'vue-stream-markdown/index.css'
 
-import type { DesignMessage } from '@/composables/use-chat'
+import type { UIMessage } from 'ai'
 
-const { message } = defineProps<{ message: DesignMessage }>()
+const { message } = defineProps<{ message: UIMessage }>()
 
-function getTextContent(msg: DesignMessage): string {
+function getTextContent(msg: UIMessage): string {
   return msg.parts
     .filter((p): p is { type: 'text'; text: string } => p.type === 'text')
     .map((p) => p.text)
@@ -34,7 +34,7 @@ function isToolPart(part: unknown): part is ToolPart {
   )
 }
 
-function getToolParts(msg: DesignMessage): ToolPart[] {
+function getToolParts(msg: UIMessage): ToolPart[] {
   return msg.parts.filter(isToolPart)
 }
 
diff --git a/src/composables/use-chat.ts b/src/composables/use-chat.ts
index 1c025763d..722258063 100644
--- a/src/composables/use-chat.ts
+++ b/src/composables/use-chat.ts
@@ -1,9 +1,10 @@
 import { Chat } from '@ai-sdk/vue'
 import { createOpenRouter } from '@openrouter/ai-sdk-provider'
 import { DirectChatTransport, ToolLoopAgent } from 'ai'
+import dedent from 'dedent'
 import { computed, ref, watch } from 'vue'
 
-import type { InferAgentUIMessage } from 'ai'
+import type { UIMessage } from 'ai'
 
 const API_KEY_STORAGE = 'open-pencil:openrouter-api-key'
 const MODEL_STORAGE = 'open-pencil:model'
@@ -16,7 +17,6 @@ export interface ModelOption {
 }
 
 export const MODEL_OPTIONS: ModelOption[] = [
-  // Design-optimized (vision + tool calling + strong spatial reasoning)
   {
     id: 'anthropic/claude-sonnet-4',
     name: 'Claude Sonnet 4',
@@ -31,9 +31,6 @@ export const MODEL_OPTIONS: ModelOption[] = [
     tag: 'Long context'
   },
   { id: 'openai/gpt-4.1', name: 'GPT-4.1', provider: 'OpenAI' },
-
-  // Fast & cheap
-  { id: 'anthropic/claude-sonnet-4', name: 'Claude Sonnet 4', provider: 'Anthropic' },
   {
     id: 'google/gemini-2.5-flash-preview-05-20',
     name: 'Gemini 2.5 Flash',
@@ -41,8 +38,6 @@ export const MODEL_OPTIONS: ModelOption[] = [
     tag: 'Fast'
   },
   { id: 'openai/gpt-4.1-mini', name: 'GPT-4.1 Mini', provider: 'OpenAI', tag: 'Cheap' },
-
-  // Open source
   {
     id: 'deepseek/deepseek-chat-v3-0324:free',
     name: 'DeepSeek V3',
@@ -57,7 +52,6 @@ export const MODEL_OPTIONS: ModelOption[] = [
   }
 ]
 
-// Deduplicate by id, keeping first occurrence
 const seen = new Set<string>()
 const deduped: ModelOption[] = []
 for (const m of MODEL_OPTIONS) {
@@ -67,9 +61,14 @@ for (const m of MODEL_OPTIONS) {
   }
 }
 export const MODELS = deduped
-
 export const DEFAULT_MODEL = MODELS[0].id
 
+const SYSTEM_PROMPT = dedent`
+  You are a design assistant inside OpenPencil, a Figma-like design editor.
+  Help users create and modify designs. Be concise and direct.
+  When describing changes, use specific design terminology.
+`
+
 const apiKey = ref(localStorage.getItem(API_KEY_STORAGE) ?? '')
 const modelId = ref(localStorage.getItem(MODEL_STORAGE) ?? DEFAULT_MODEL)
 const activeTab = ref<'design' | 'ai'>('design')
@@ -88,7 +87,14 @@ watch(modelId, (id) => {
 
 const isConfigured = computed(() => apiKey.value.length > 0)
 
-function createAgent() {
+// eslint-disable-next-line @typescript-eslint/no-explicit-any -- test-only mock transports don't implement full generics
+let overrideTransport: (() => any) | null = null
+
+let chat: Chat<UIMessage> | null = null
+
+function createTransport() {
+  if (overrideTransport) return overrideTransport()
+
   const openrouter = createOpenRouter({
     apiKey: apiKey.value,
     headers: {
@@ -97,25 +103,32 @@ function createAgent() {
     }
   })
 
-  return new ToolLoopAgent({
+  const agent = new ToolLoopAgent({
     model: openrouter(modelId.value),
-    instructions:
-      'You are a design assistant inside OpenPencil, a Figma-like design editor. ' +
-      'Help users create and modify designs. Be concise and direct.'
+    instructions: SYSTEM_PROMPT
   })
+
+  return new DirectChatTransport({ agent })
 }
 
-type DesignAgent = ReturnType<typeof createAgent>
-export type DesignMessage = InferAgentUIMessage<DesignAgent>
-
-function createChat() {
+function ensureChat(): Chat<UIMessage> | null {
   if (!apiKey.value) return null
+  if (!chat) {
+    chat = new Chat<UIMessage>({
+      transport: createTransport()
+    })
+  }
+  return chat
+}
 
-  const agent = createAgent()
+function resetChat() {
+  chat = null
+}
 
-  return new Chat<DesignMessage>({
-    transport: new DirectChatTransport({ agent })
-  })
+if (typeof window !== 'undefined') {
+  window.__OPEN_PENCIL_SET_TRANSPORT__ = (factory) => {
+    overrideTransport = factory
+  }
 }
 
 export function useAIChat() {
@@ -124,6 +137,7 @@ export function useAIChat() {
     modelId,
     activeTab,
     isConfigured,
-    createChat
+    ensureChat,
+    resetChat
   }
 }
diff --git a/src/global.d.ts b/src/global.d.ts
index 9473e0659..98bcec77c 100644
--- a/src/global.d.ts
+++ b/src/global.d.ts
@@ -20,4 +20,6 @@ interface Window {
       blob(): Promise<Blob>
     }[]
   >
+  // eslint-disable-next-line @typescript-eslint/no-explicit-any
+  __OPEN_PENCIL_SET_TRANSPORT__?(factory: () => any): void
 }
diff --git a/tests/e2e/chat-panel.spec.ts b/tests/e2e/chat-panel.spec.ts
new file mode 100644
index 000000000..0aa757f32
--- /dev/null
+++ b/tests/e2e/chat-panel.spec.ts
@@ -0,0 +1,153 @@
+import { expect, test, type Page } from '@playwright/test'
+
+import { CanvasHelper } from '../helpers/canvas'
+
+const USE_REAL_LLM = process.env.TEST_REAL_LLM === '1'
+const OPENROUTER_KEY = process.env.OPENROUTER_API_KEY ?? ''
+
+let page: Page
+let canvas: CanvasHelper
+
+test.describe.configure({ mode: 'serial' })
+
+test.beforeAll(async ({ browser }) => {
+  page = await browser.newPage()
+  await page.goto('/')
+  canvas = new CanvasHelper(page)
+  await canvas.waitForInit()
+
+  if (!USE_REAL_LLM) {
+    await injectMockTransport(page)
+  }
+})
+
+test.afterAll(async () => {
+  await page.close()
+})
+
+async function injectMockTransport(page: Page) {
+  await page.evaluate(() => {
+    const setTransport = window.__OPEN_PENCIL_SET_TRANSPORT__
+    if (!setTransport) throw new Error('Transport override not available')
+
+    setTransport(() => ({
+      async sendMessages({
+        messages,
+      }: {
+        messages: Array<{ role: string; parts: Array<{ type: string; text?: string }> }>
+      }) {
+        const lastUser = [...messages].reverse().find((m) => m.role === 'user')
+        const text = lastUser?.parts?.find((p) => p.type === 'text')?.text ?? ''
+
+        const words = `I'll help you with: "${text}". Here's a mock response.`.split(' ')
+
+        return new ReadableStream({
+          start(controller) {
+            controller.enqueue({ type: 'start', messageId: 'mock-msg-1' })
+            controller.enqueue({ type: 'text-start', id: 'text-1' })
+            for (const word of words) {
+              controller.enqueue({ type: 'text-delta', id: 'text-1', delta: word + ' ' })
+            }
+            controller.enqueue({ type: 'text-end', id: 'text-1' })
+            controller.enqueue({ type: 'finish', finishReason: 'stop' })
+            controller.close()
+          },
+        })
+      },
+      async reconnectToStream() {
+        return null
+      },
+    }))
+  })
+}
+
+function chatTab() {
+  return page.getByRole('tab', { name: 'AI' })
+}
+
+function designTab() {
+  return page.getByRole('tab', { name: 'Design' })
+}
+
+function chatInput() {
+  return page.locator('input[placeholder="Describe a change…"]')
+}
+
+function apiKeyInput() {
+  return page.locator('input[placeholder="sk-or-…"]')
+}
+
+test('⌘J switches to AI tab', async () => {
+  await designTab().waitFor()
+  await page.keyboard.press('Meta+j')
+  await expect(chatTab()).toHaveAttribute('data-state', 'active')
+})
+
+test('⌘J switches back to Design tab', async () => {
+  await page.keyboard.press('Meta+j')
+  await expect(designTab()).toHaveAttribute('data-state', 'active')
+})
+
+test('clicking AI tab shows API key setup when no key set', async () => {
+  await chatTab().click()
+  await expect(apiKeyInput()).toBeVisible()
+  await expect(page.getByText('Enter your OpenRouter API key')).toBeVisible()
+})
+
+test('saving API key shows chat interface', async () => {
+  const key = USE_REAL_LLM ? OPENROUTER_KEY : 'sk-or-test-key-12345'
+  await apiKeyInput().fill(key)
+  await page.locator('button:has-text("Save")').click()
+
+  await expect(chatInput()).toBeVisible()
+  await expect(page.getByText('Describe what you want to create or change.')).toBeVisible()
+})
+
+test('empty input has disabled send button', async () => {
+  const sendButton = page.locator('button[type="submit"]')
+  await expect(sendButton).toBeDisabled()
+})
+
+test('typing enables send button', async () => {
+  await chatInput().fill('Make a red rectangle')
+  const sendButton = page.locator('button[type="submit"]')
+  await expect(sendButton).toBeEnabled()
+})
+
+test('Enter submits message and clears input', async () => {
+  await chatInput().fill('Make a red rectangle')
+  await chatInput().press('Enter')
+
+  await expect(page.getByText('Make a red rectangle', { exact: true })).toBeVisible({ timeout: 5000 })
+  await expect(chatInput()).toHaveValue('')
+})
+
+test('assistant responds', async () => {
+  if (USE_REAL_LLM) {
+    await expect(
+      page.locator('.chat-markdown, [class*="rounded-tl-md"]').first(),
+    ).toBeVisible({ timeout: 30000 })
+  } else {
+    await expect(page.getByText('mock response', { exact: false })).toBeVisible({ timeout: 5000 })
+  }
+})
+
+test('model selector is visible and clickable', async () => {
+  const trigger = page.getByRole('combobox')
+  await expect(trigger).toBeVisible()
+  await trigger.click()
+
+  await expect(page.getByText('Claude Sonnet 4')).toBeVisible()
+  await expect(page.getByText('Recommended')).toBeVisible()
+  await expect(page.getByText('Free').first()).toBeVisible()
+
+  await page.keyboard.press('Escape')
+})
+
+test('switching tabs preserves chat', async () => {
+  await designTab().click()
+  await expect(designTab()).toHaveAttribute('data-state', 'active')
+
+  await chatTab().click()
+  await expect(page.getByText('Make a red rectangle', { exact: true })).toBeVisible()
+})