OC Dealership Sells Tesla Model S For $103K Worth of Bitcoins
December 9, 2013 12:01 PM
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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.
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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.
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