OC Dealership Sells Tesla Model S For $103K Worth of Bitcoins
December 9, 2013 12:01 PM
comment(s) - last by
Bitcoins continue to be accepted by more businesses, but does subsequent conversion to USD show them to be a fad?
UPDATE 12/10/2013 7:50 a.m. (Tuesday)
As a reader points out there's been a twist in this story. While the headline still appears accurate, details of the story have shifted.
According to Pietro Frigerio, general manager of Lamborghini Newport Beach, his dealership didn't actually accept bitcoins at an point in the transaction. According to a clarification he issued in
Squawk on the Street
, the customer did buy the vehicle with bitcoins, but he did the conversion to USD, not the dealership. This seems to contradict/correct the earlier comments of a sales manager at the dealership.
"The transaction in our bank account, we received a wire in U.S. dollars. So you could say that I didn't want bitcoins. And I never touched bitcoins," Mr. Frigerio explains.
So strike one business that accepts bitcoin; the dealership treated the bitcoins like foreign currency or gold bars, asking the customer to take care of the exchange to U.S. currency. Still it's an intriguing tale that illustrates the rising value of the bitcoin.
In Orange County, Calif. suburb Costa Mesa a Lamborghini dealership is making headlines after it began to accept bitcoins -- a popular electronic cryptocurrency -- for purchases.
An anonymous buyer from the Orlando, Fla. area purchased a decked-out Tesla Motors Inc. (
) Model S from the dealership last week for bitcoins (
reportedly 91.4 bitcoins
, which works out to about $103,000 USD at last week's exchange prices). This believed to be the first time that a premium electric vehicle (EV) has been sold for bitcoins. The car came with a tan leather interior and a glass sunroof.
Much like Tesla, a bit of
scrutiny from the media
hasn't hurt the bitcoin value
. In fact it appears to have driven it to fresh highs. A year ago those bitcoins would have been worth $1280 USD, when the currency dipped to $14 USD, but thanks to a surge in value and interest, Bitcoins were
trading at all time highs
of over $1,000 last week.
Tesla Model S
Virgin Galactic also announced in recent weeks that it would
accept bitcoins to book suborbital flights
. Founder Richard Branson is a bullish support of bitcoins.
Last week's Model S purchase worked out like this: the Orange County luxury vehicle dealership sent the man an invoice, received the payment in bitcoins, exchanged the coins for U.S. currency at an undisclosed exchange, and finalized the purchase. General sales manager Nick Jones
The OC Register
, "It’s just another method to sell cars. [The buyer is] happy."
Bitcoins continue to be accepted by more and more businesses, although most promptly trade the digital currency for USD. [Image Source: Getty Images]
The Model S is arguably the most successful luxury electric vehicle, having won
magazine's 2013 "Car of the Year".
In Q3 Tesla delivered 5,500 Model S sedans, including 1,000 to the European market. Tesla is now producing over 550 Model S EVs per week. Still the automaker posted a $38M USD loss on revenue of $431M USD, in the midst of production expansions. The loss reversed
a profitable Q2
. But the company is still pretty well positioned having
paid off its $465M USD in low-interest U.S. federal government loans early
via the cash from initial Model S sales.
Tesla is eyeing its first try at
an affordable mass-market EV
. Tesla in May promised
a sub-$40,000 USD EV in 3 to 4 years
with a range identical to GM's proposed one -- 200 miles.
A Tesla Store [Image Source: Electric Cars Report]
The company is also looking to navigate two key struggles -- a controversy over dealership sales and a string of incidents in which its battery packs caught fire after collisions.
U.S. National Highway Traffic Safety Administration
recent vehicle fires
due to collisions with large road debris
(e.g. a trailer hitch in one case), which prevented the aluminum plate protecting the lithium ion battery pack. The fires were black mark on a vehicle that had
achieved extremely high safety ratings in crash tests
by issuing a mid-November software update to raise the underbody of its cars (clearance) higher off the road when traveling at highway speeds.
Tesla also has been in
high profile battles
a number of states
, who after being
lobbied by traditional automakers/dealerships
passed or proposed passing bans
sales of automakers like Tesla
who don't have physical dealerships in state. Still Tesla has weathered these storms and seems to be finding no shortage of buyers for its Model S.
This article is over a month old, voting and posting comments is disabled
RE: Did it really happen?
12/10/2013 6:23:32 PM
very simple: if you put money in the bank, you're not putting it "in the bank", you're lending that bank your money.
Through something called "fractional reserve banking", the bank is only required to keep a fraction of your deposit "in the bank".
Say you deposit $100. Say the "tier 1 capital ratio" of the bank is 10% (the fraction). The bank is then required to only keep $10 for your $100 in the bank. The other $90 can then be loaned out to another person or business.
This $90 is then loaned out and another person or business eventually deposits it into another bank. The process repeats, requiring the other bank to keep $9 for the company "in the bank", allowing them to loan out another $81 to another person/business.
This process repeats until nearly $1000 of new money is made out of $100 of initial money. So if there's only $100 of money, there must be $900 in debt - money loaned out by the banks that, and here's the kicker, *has to be paid back to the banks*. Hence, debt.
That's the main reason why you'll hear people say money is debt though it goes beyond even that. That initial $100 was borrowed by the government from the federal reserve. The fed gets treasuries, the government gets money. Ofcourse that needs to be paid back to the fed, making even the initial $100 debt.
Here's the kicker to that story: Interest. The fed is the one conjuring money into existance but the government borrows that money from the fed at interest. So where does the interest come from?
This is why the US, or better said the dollar, recovering is an mathematical impossibility. There is and will always be more debt in existance then there are dollars. Pay down the debt - you'll run out of dollars while still remaining with the interest on the debt you just paid down.
That's the basics though. In practice it turns out the currency simply gets hyperinflated at some point and becomes worthless, solving the whole problem of paying down the debt (currency worthless -> debt worthless!). Ofcourse at the minor inconvenience of ruining your economy for atleast a decade or 2 in the process.
Which is where the US finds itself today - the $85 billion of QE a month by the fed is nothing more then hyperinflation. Except it's still moving at a slow enough pace where we still call it "inflation" (not in the least helped by the government's doctored inflation numbers). If they would stop though - markets will crash, leading to a credit crunch (Loans go bad -> written off the books off banks -> banks strapped for cash -> won't loan out more money AKA "credit crunch") which causes deflation.
Because the fed wants to avoid this, as the great depression was basically a deflationairy spiral as less money being loaned out equals less money available for spending and investments equals even more deflation which is the spiral, they will print out the difference in new money making that $85 billion a month look like chump change. This is basically what happened in 2008 and the reason why the federal reserve went from a $400 billion balance sheet to a $4 trillion balance sheet in 5 years.
Note: this has already happened in the last 5 years. The next one *will* be bigger and it *will* happen. Cut spending raise taxes doesn't matter one iota. It's a good bet then the dollar will lose it's world reserve currency status (AKA the currency everybody wants and everybody trades in) so if you think things are expensive now, hah, they will never ever be this cheap again. Atleast for the US.
I think that covers everything. Oh, except for one thing; can it be avoided? Awnser is simple: No. 40+ years of bad fiscal policy has already happened. The crash (hint:2008) has already happened. We're simply at a point in time where the front of the train has derailed, yet our wagon at the back simply hasn't passed the point of disaster yet.
My advice would be to jump off before it does.
RE: Did it really happen?
12/11/2013 4:11:27 PM
You're misinterpreting what I'm saying. It's not merely our choice of fractional reserve banking that makes money debt.
It's the core concept of money: A transactional tool with commonly understood sense of value across a geographical region and predictable change over time.
That means every dollar is an IOU from society to give you a unit of goods. That's debt in my book.
If you back money with gold or any other commodity, you are giving up on the premise behind what money is, and instead just relying on blind faith that this commodity can approximate it. In an economy at the zero lower bound, that faith will be proven wrong, and we will indeed reach a deflationary spiral.
As for your doomsday scenario and advice, where exactly are all the holders of US dollars going to jump to?
The beauty of a country having its own currency is that it always balances out. If people buy gold, someone sold it for US dollars. If China wants to sell debt, then somebody else will buy it (since they're earning 0% anyway in the bank). If you exchange currency, then someone else is buying US dollars. If the US dollar gets too weak, exports go up and imports get replaced by domestic production. If the holders of US debt buy goods or invest, jobs are created and the economy improves. The Fed is already virtually printing money by buying treasuries, and nobody is under the illusion that the US gov't will ever clear its debt to zero. The gov't will keep offering more treasuries, and as long as the economy is in the dumps with nothing better to do with US dollars, the wealthy will keep buying them.
The only monetary danger to the US dollar is politically driven gov't default or the Fed going rogue and abandoning its inflation target. What happened to Greece/Spain cannot happen here.
"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
Tesla Motors Still Looking to Win Against Dealerships, But Auto Dealers have Lobbying Cash
November 29, 2013, 12:47 PM
Virgin Galactic to Accept Bitcoins for Suborbital Space Flights
November 22, 2013, 3:49 PM
U.S. Government: "Bitcoin has...Confused the Heck Out of Many of Us"
November 19, 2013, 7:30 PM
NHTSA Opens Formal Investigation on Tesla Model S Fires
November 19, 2013, 11:45 AM
Norwegian Man Makes Bitcoin Fortune from $27 Investment
October 31, 2013, 12:53 PM
Hot Air? President Obama, G7 Pledge to Eliminate Most Fossil Fuel Use by 2100
June 8, 2015, 5:40 PM
Study Predicts Self-Driving Vehicles Could Rake in Billions
March 6, 2015, 8:34 AM
Dual-Motor Tesla Model S P85D's "Insane Mode" Shocks Passengers
January 28, 2015, 11:18 PM
2016 Cadillac CTS-V Packs 640 hp Punch with 200 mph Reach
January 23, 2015, 3:25 PM
BMW Testing Tech to Allow Users to Auto-Park, Summon Cars Via Smartwatch
December 16, 2014, 9:30 AM
Lamborghini Offers Up $6,000 Leather-Bound Android Smartphone
December 12, 2014, 3:12 PM
Most Popular Articles
Samsung Gear S2 Borrows Circular Icons From Apple Watch
August 21, 2015, 2:48 PM
Future of Lumia Uncertain as Microsoft Lays Off 2,300, Closes 1 of 3 Finnish Offices
August 24, 2015, 6:14 PM
Kentucky Man Faces up to 10 Years in Prison for Shooting Drone Trespasser
August 13, 2015, 2:58 PM
Microsoft's Windows 10 Leaves Lumia 530 Behind w/ 8 GB Storage Requirement
August 25, 2015, 4:02 PM
Aluminum 7003, Used in Roofing, May be Tapped by Apple for iPhone 6S/6S+
August 24, 2015, 4:45 PM
Latest Blog Posts
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
More Blog Posts
Copyright 2015 DailyTech LLC. -
Terms, Conditions & Privacy Information