Last week we reported that someone had bought a Tesla Motors Inc (NASDAQ:TSLA) Model S sedan using bitcoins from a California auto dealer. The dealer had reported the sale on its website. However, technically, the story is a little less interesting.
Bitcoins converted to buy the Tesla
CNBC reports that in reality, the dealership actually received their money in U.S. dollars. The only reason it was reported that they had sold a Tesla Motors Inc (NASDAQ:TSLA) Model S to someone who paid in bitcoins was because the auto dealer had the bitcoins converted to U.S. dollars before the payment was wired into its bank account. Apparently this is the same method the auto dealer uses to accept payments from those wanting to pay using gold bars or foreign currency. Then he reported it on the website as having sold their first vehicle for bitcoins.
Pietro Frigerio of Lamborghini Newport Beach in Costa Mesa, Calif. said today that technically, they never touched any bitcoins. “So you could say that I didn’t want bitcoins. And I never touched bitcoins,” He told CNBC’s “Squawk on the Street.”
Tesla Model S was worth 91.4 bitcoins
Last week when the payment for the certified pre-owned Tesla Motors Inc (NASDAQ:TSLA) vehicle was made, the buyer apparently paid around 91.4 bitcoins for it. The digital currency has seen its shares of ups and downs over the last few days. It spent several days trading at over $1,000. However, today it dipped down to a low of $718 on Japanese bitcoin exchange Mt. Gox.
If the value of bitcoins continues to fall, then the buyer of the used Tesla may have overpaid. According to Frigerio, the Tesla Model S was bought sight unseen by someone in Florida, who paid using bitcoins—after turning them into cash first. Frigerio compared the transaction to if someone wanted to buy a car from them using gold bars.
“We will not accept that,” Frigerio told CNBC. “We will accept U.S. dollars. You go out. You exchange it. You come back to us. That’s how it worked.”
Salesman embellishing just a bit?
Sounds to me like the statement made on the auto dealer’s blog page is a bit misleading. “Lamborghini Newport Beach is proud to announce that we are fully capable of accepting Bitcoin as payment for vehicles,” the site reads.
We might be splitting hairs here, but by the metric Frigerio is describing, anyone could accept bitcoins as payment—as long as someone converts them to cash first. His statement on CNBC makes it sound like the buyer would have to take the steps to exchange the bitcoins for cash before completing the transaction, so it’s a little unclear what, if any role, the auto dealer played in taking bitcoins for the Tesla Motors Inc (NASDAQ:TSLA) Model S.
Maybe the buyer only asked about using bitcoins over the phone and was told to exchange them first. If that’s what happened, I’m not sure it’s fair for the auto dealer to say they can accept bitcoins. Of course there are digital wallets which could make the process easier than lugging all your gold bars down to the bank to get cash for them. But maybe they just wanted the publicity. It certainly worked.