Tesla now accepts Bitcoin as payment, yet in its own terms and conditions, the automaker pretty much explains why it isn’t such a hot idea to buy a Tesla with Bitcoin.
The move follows a $1.5 billion investment that the automaker made in the cryptocurrency earlier this year.
It sent the price of the cryptocurrency, which is already infamous for being volatile, higher.
Tesla’s support of Bitcoin has been controversial due to the cryptocurrency’s extensive use of energy conflicting with what Tesla stands for in terms of combating climate change.
Putting that aside, there’s also the question of whether or not it actually makes any financial sense to purchase a Tesla vehicle using Bitcoin.
Now that we have access to Tesla’s terms and conditions of Bitcoin payment, it looks like Tesla itself is admitting that it doesn’t make a lot of sense.
The disclosure includes simple things like making sure you input the right digital wallet number and the right amount of Bitcoin, but it also issues several more important warnings.
For example, Tesla acknowledges that Bitcoin is volatile and the automaker only provides the price in USD with an equivalent Bitcoin price that is only available in a temporary “Bitcoin Price Window”:
The price of Bitcoin can be volatile and subject to upward and downward movements. You are responsible for initiating a payment of Bitcoin in the exact Bitcoin Price amount indicated on the payment webpage within the Bitcoin Price Window. Each Bitcoin Price will expire after the Bitcoin Price Window. After the Bitcoin Price expires, you will need to request a new Bitcoin Price and Bitcoin Price Window on the payment webpage and you may be required to restart the payment process. With respect to order fees and/or deposits, if you transmit an amount other than the Bitcoin Price, your order may fail, we may refund your order fee and/or deposit pursuant to these Bitcoin Terms, and you will be required to resubmit the payment to us in the correct amount to allow us to process your order. With respect to final payments: (i) if you transmit less than the Bitcoin Price, we will keep your payment and apply it to the amount due and you will be required to pay the outstanding balance; (ii) if you transmit more than the Bitcoin Price, you will not be entitled to reimbursement of the excess amount.
Therefore, while you are buying the car using Bitcoin, you are really buying the car at its USD value.
That leads to a bigger problem in the case of a refund or a buyback.
In the case of a refund, Tesla doesn’t have to pay you back in Bitcoin nor the amount that you paid in Bitcoin, but only the value in USD that is listed in the bill of sale (Tesla capitalized that section itself):
If you are entitled to a refund of your payment or to a buyback, we reserve the right to refund to you either the exact Bitcoin Price that you provided to us at the time of purchase or an amount of US Dollars that is equivalent to the US Dollar price of the product that you purchased, at our sole and absolute discretion, taking into consideration operational efficiency. The same applies to all fees and incidental costs to which you are entitled. THE PRICE OF BITCOIN CAN BE VOLATILE AND THE VALUE OF BITCOIN RELATIVE TO US DOLLARS MAY DECREASE OR INCREASE BETWEEN THE TIME THAT YOU MAKE YOUR PURCHASE AND THE TIME THAT WE PROVIDE A REFUND OR BUYBACK. IF WE REFUND YOU IN BITCOIN, THE VALUE OF SUCH AMOUNT OF BITCOIN RELATIVE TO US DOLLARS MIGHT BE SIGNIFICANTLY LESS THAN THE VALUE OF SUCH AMOUNT OF BITCOIN RELATIVE TO US DOLLARS AT THE TIME OF YOUR PURCHASE. IF WE REFUND YOU IN US DOLLARS, THE US DOLLAR AMOUNT THAT WE PROVIDE TO YOU AS A REFUND MIGHT BE SIGNIFICANTLY LESS THAN THE CURRENT US DOLLAR MARKET VALUE OF THE AMOUNT OF BITCOIN IN WHICH YOU MADE YOUR PAYMENT. YOU ASSUME THE RISK OF BITCOIN PRICE. DEPRECIATION AND APPRECIATION AND WILL HAVE NO RIGHT TO SELECT THE METHOD OF REFUND. YOU ARE NOT ENTITLED TO RECEIVE ANY APPRECIATION ON THE VALUE OF THE BITCOIN THAT YOU PROVIDED TO US AS PAYMENT IN CONNECTION WITH A REFUND OR BUYBACK.
With the kind of price swings that Bitcoin has been experiencing, someone buying a Tesla with Bitcoin could overpay by 50% within a few days of the purchase.
To be fair, Tesla is not the only company that accepts Bitcoin payment that does that. It’s fairly common, as many of them simply exchange Bitcoin for their main fiat currency right away.
Here’s Tesla’s disclosure for Bitcoin payment in full:
[scribd id=500160636 key=key-X9TMLL4JmKYepWpdXaR5 mode=scroll]
I really don’t see the value of using Bitcoin to buy a Tesla at this point.
In Bitcoin’s current state, it’s hard to argue that it is a good network for transactions. It is more of an investment that you hope gains value, like gold. And you don’t see people showing up at Tesla with gold bars to buy a Model S.
I am myself bullish on cryptocurrency, and I have several crypto investments, but I wouldn’t advise buying a car, or anything else for that matter, with Bitcoin.
The only reason that makes sense, and even then it’s a stretch, is if you are planning to buy a Tesla using gains made with Bitcoin that you were planning to realize by selling your crypto for USD. But even then, you are just skipping a step.
Personally, it feels like Tesla is trying to help legitimize its own investment in Bitcoin and maybe attract the business of some people that became rich off Bitcoin.
What do you think? Let us know in the comment section below.
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