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Tesla's Model Y becomes world's first best-selling EV car

Yahoo Finance automotive reporter Pras Subramanian discusses Tesla's Model Y becoming the world's first best-selling EV car, beating Toyota's Corolla, as well as Toyota vehicles popularity.

Video transcript

- Well, staying with cars, Tesla's Model Y is the world's best selling car, beating out Toyota's RAV4 and its Corolla models. Now, this marks the first time an all electric vehicle is the best selling car across the globe. Joining us now is Yahoo Finance's Pras Subramanian, to break this down for us. Quite a move here for Tesla.

PRAS SUBRAMANIAN: Yeah. If you want to sell a lot of product, cutting prices usually is the way to do it. And that's what happened here with Tesla. As you said just now, Tesla crossing that top global selling car, according to [? Jcorp ?] Research and Motor1.com. Seeing that Tesla Model Y sold 267,000 units in Q1, just above that Toyota Corolla, which sells globally at 236,000 there for the top two.

Drilling down into those numbers you see that, 35% of all Model Y's are actually sold in China, that's up 26% year over year. And 31% of all Model Y's were sold in the US. That's up a whopping 68% year over year. Now, good news here. But like I said before, cutting costs does hurt your margins. It's a concern for Tesla investors, seeing that margin, gross margin dip below 20%.

Musk doesn't seem, CEO Elon Musk doesn't seem so worried about it. He wants to grow that install base. He wants to sell higher margin software products. So that's his goal there. But but also want to note that, don't feel too bad about Toyota here because of the top five vehicles. Four of them were Toyota vehicles, and they have a global footprint, like I mentioned, and they're able to weather certain concerns or issues that happen, that pop out in the low territory by territory, whereas Tesla is levered to US, China, and Europe as its top three territories.

- So with that in mind then, how long do you think Tesla can hold that spot? Especially if perhaps prices start to change and then they start to level off. Whereas some of these legacy companies and a Toyota are slow and steady and consistent with their pricing.

PRAS SUBRAMANIAN: I think that with Q1 in the books, it seems like a good trend. The trend is positive for Tesla, they're probably going to try to grow on that within, of course, China, and the EU, and the US. This quarter in Q2 are the first full quarter with the EV tax credit in effect, so that should help US sales.

But like I mentioned before, at least Toyota can go, can sell across multiple territories across the globe. Tesla hasn't done that yet. They're not super huge in Asia beyond China, they're trying to grow in places like Thailand, India, Indonesia, that's up next. So that's the plan for Tesla.

I surmise that Toyota will probably sell a lot more vehicles in the back half of the year. They can sell cheaper gas powered cars, hybrids, across the globe. Their midsize pickup, the Toyota Hilux, is a huge seller for them beyond the Corolla, and beyond the Camry. So they have a lot going on. I don't know if Tesla will actually win the overall 2022 or 2023 global race here. But good start for them in Q1.

- Indeed. Pras Subramanian there for us with that update.