Tesla CEO Elon Musk confirmed yesterday that the automaker will now be accepting Bitcoin as a form of payment in its day-to-day business operations. But is it a good idea? According to Tesla’s terms and conditions it’s not.
The announcement yesterday came just a few weeks after the EV giant announced a massive investment of $1.5 billion into the cryptocurrency.
Following the announcement the price of Bitcoin skyrocketed to its highest sell point yet. However, Tesla’s purchase has been seen as controversial by many as it conflicts with the automaker’s goals of combating climate change and offer eco-friendly transportation, among other things. The reason behind this is the extensive use of energy associated with mining the cryptocurrency, maintaining the blockchain, and making transactions.
However, a new concern has been brought to light by the California-based automaker which is: Is purchasing a Tesla vehicle using Bitcoin financially smart?
Apparently not, and Tesla’s terms and conditions of Bitcoin payment is making that very clear.
In addition to reminders to double check that you are inputing the right digital wallet number as well as the right amount of Bitcoin, the disclosure also points out quite a few red flags.
In the disclosure, Tesla acknowledges the instability of Bitcoin‘s price: “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.”
In layman’s terms, you may be purchasing a Tesla vehicle using Bitcoin, but in reality you are still purchasing the EV at its USD value. Something that could spell trouble for the EV giant in regards to refunds and buybacks.
According to the automakers disclosure, they are not responsible for paying any buyer back in Bitcoin or the amount they paid in Bitcoin. Tesla instead will only be required to refund the value that is listed on the bill of sale in USD.
Read the details in the portion below. Don’t worry, YOU CANT MISS IT: “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.”
If you are at all familiar with Bitcoin, now is probably not the time to use it on a large purchase such as a Tesla vehicle as you could overpay by a lot after just a couple weeks. But, to each their own. If you’re looking to trade your Bitcoin profits for a brand new Tesla, it might be a smart move to read Tesla full disclosure for Bitcoin payment here.