Until yesterday, you could order your Tesla online with multiple currencies worldwide, just not cryptocurrency. However, Elon Musk took to Twitter yesterday to announce that Tesla will accept bitcoin as payment moving forward. This latest announcement comes one month after the carmaker announced its purchase of $1.5 billion worth of bitcoin.
According to CNBC, the carmaker utilizes open-source software to accept this new form of payment. Additionally, once the carmaker receives these bitcoin payments, it won’t convert these coins back into fiat money. However, there are a few reasons why you may want to buy your next EV the old-fashioned way.
Why would Elon Musk want Tesla to accept Bitcoin?
As mentioned earlier, Tesla and Elon Musk have taken huge steps to embrace bitcoin in the last few months. This all started when the EV carmaker purchased a massive $1.5 billion worth of Bitcoin. According to CNBC, the carmaker made this purchase so it could have “more flexibility to further diversify and maximize returns on our cash.”
Following this initial purchase, Elon Musk added “#bitcoin” to his bio on Twitter, resulting in a temporary 20 percent spike in cryptocurrency’s price, says CNBC. As a result, having such a massive automaker embrace bitcoin will inevitably cause its value to increase over time.
This is an important factor to this Tesla story since the company reportedly does not plan to convert its bitcoins back into fiat money. As CNBC reports, this allows the carmaker to benefit from price swings in the cryptocurrency market. However, this move could have some potential downsides for competitors.
Is buying a car with bitcoin a good idea?
As MKBHD points jokingly point out on Twitter, you can now buy your Tesla, which is a depreciating asset, with bitcoin, an asset that is currently appreciating. As a result, the relative price you paid for your car can shift over time.
Given bitcoin’s extreme volatility, the price of a Tesla can change daily. As a result, time will tell how the carmaker plans to advertise pricing for new vehicles. Additionally, if you opt to return your vehicle, you’re not getting your bitcoins back.
According to CNBC, Tesla reportedly issued a statement saying it will retain the ability to pay refunds in US dollars. While this refund will be calculated based on bitcoin’s price when you purchased the vehicle, if the cryptocurrency goes up, Tesla will save money by switching to US dollars.
How do I buy a Tesla?
Whether you’re using US dollars or bitcoin, your next Tesla purchase will be completed online. Unlike most other manufacturers, Tesla doesn’t follow the traditional business model. Instead, it sells directly to consumers via its website. This is where this new bitcoin option comes in. Since you can switch between US dollars and bitcoin at checkout, there is no need to involve a third party.
If this trend catches on, we just might see larger established automakers adopting a similar payment and delivery system in the not too distant future.