Musk says Tesla has begun accepting Bitcoin as payment for its electric vehicles

Tesla, the world’s biggest electric vehicle company, is accepting Bitcoin as payment for its cars, according to its founder Elon Musk.

Mr Musk made the announcement through Twitter yesterday.

“Tesla is using only internal and open source software and operates Bitcoin nodes directly,” Mr Musk said in the tweet.

“Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency.”

Initially, this option will only be available to the US customers but Tesla will gradually make this payment method available in other markets in the coming months, Mr Musk said.

In February, Tesla said it invested $1.5 billion in the biggest cryptocurrency and revealed that it will begin accepting it as payments for its cars. The move sparked a rally in Bitcoin, which was mostly used as a speculative investment instrument rather than a form of day-to-day payment.

Bitcoin surged almost 2.3 per cent to $56,748 per coin at 7.19pm UAE time after Tesla said it began accepting the cryptocurrency.

“Elon Musk has surprised everyone again and traders are waking up to this big news that Bitcoin has the ability to buy Tesla,” Naeem Aslam, chief market analyst at brokerage Avatrade, wrote in a note.

“There is no doubt that Tesla is the future for the car industry and the fact that we can use Bitcoin to buy Tesla says everything about adoption.”

For conservative investors, the news further reaffirms their stance that Tesla share prices and Bitcoin are both in the “bubble territory”, said Vijay Valecha, chief investment officer at Century Financial.

Tesla’ typical car costs an average of $40,000 to $130,000 before taxes, Mr Valecha said. “This amounts to 0.75 to 2.6 Bitcoin depending on the model selected.”

“Tesla has informed that it operates own Bitcoin nodes implying it can directly verify the transactions, avoiding the problem of double spend attack,” he added.

Industry analysts are bullish and expect Bitcoin to touch the $65,000 mark.

Tesla’s stock closed 1.2 per cent lower at $662.2 per share on Tuesday and was trading at $661.92 at 7.23pm UAE time yesterday. Its shares have climbed more than 555 per cent in the past 12 months.

The California company, which joined the S&P 500 index in December, delivered almost 500,000 vehicles last year. It aims to deliver more than 750,000 cars this year.

Tesla accounted for 16 per cent of the EV market in 2019, compared with a 12 per cent share in 2018, according to McKinsey’s EV index.