Tesla’s interest in HVAC pushes Daikin to launch digital AC services

Japanese AC innovator Daikin launches its unique digital AC services in Africa. It is an air conditioning service for smartphones that is only used when needed. The business model is such that the user pays the initial setup fee of $77 and then $1.40 per day of usage. It is not necessary to purchase the air conditioning unit.

Image Credits – Nikkei Asia

The news comes as Tesla’s Elon Musk expressed interest in another new pet project, “home-HVAC,” which would mean competition when tendering for Daikin. Nikkei Asia reported that the urgency for the launch of Daikin’s digital services is due to Tesla’s potential entry into the industry.

Taro Mitani, Daikin’s head of collaborative startups, said their new business model is part of their drive to adopt digital services. He said, “We wanted to try a new operating model.” Initially, they plan to reach 50,000 subscriptions for AC services and eventually switch to other businesses like beauty salons, etc.

Although the push came when Tesla is known for entering the company, the idea was there within Daikin all along. It was the result of a conversation between Wassha’s Daikin Chairman and CEO, Noriyuki Inoue, and Satoshi Akita. As a result, both worked together for the debt collection process in this area. While listening to Akita’s experiences in Africa, Daikin thought of breaking away from the traditional services of just production and sales.

Tesla effect

Tesla’s potential entry into the industry has been reported to help things move forward. But it was back in September that Elon Musk mentioned the new pet project, the HVAC (heating, ventilation, and air-conditioning) system for the home. Technically, Tesla already has an efficient system that could be implemented in homes. The in-car HVAC system for Tesla cars is impressive. Prior to this, Musk tweeted in March about HVAC systems in the home.

Musk’s target is nowhere near Africa, may start with US customers. Since they have not yet entered the market, they will have to test their models and then expand globally. However, Daikin, already active in the sector, plans to target the least demanded location, Africa. Only 1% of households are equipped with air conditioners and Africa is known to account for only 3% of air conditioners worldwide.

If not Tesla, other electronics companies are aligned with the African market as their target, such as Korea’s LG Electronics and China’s Midea Group. The maintenance services are known not to be prevalent in the location, despite the fact that they offer affordable prices. Daikin determined that 7 out of 10 AC units in the country were broken or in need of repair. In the deal with Wassha and Daikin, customers can also rent LED lanterns.

Image Credits – Asia Nikkei

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