Meghana KandraJapan’s AC innovator Daikin launches its unique digital AC services in Africa. It is a smartphone air-conditioning service that will be used only when needed. The business model is such that the user will be paying an initial installation cost of $77 and then $1.40 per day’s use. There is no need to purchase the air conditioning unit.
Image credits- Nikkei Asia
The news comes as Tesla’s Elon Musk showed interest in another new pet project, “home-HVAC” which would mean competition in entering for Daikin. Nikkei Asia reported that the urgency for Daikin’s digital services launch is because of Tesla’s possible entry into the industry.
2/ Daikin's Africa project is a push into digital services. One reason for the urgency is the possible entry of Tesla. Elon Musk has signaled interest in entering home-HVAC (heating, ventilation and air conditioning) that is quiet and efficient. pic.twitter.com/8uMaWikskh
— Nikkei Asia (@NikkeiAsia) August 28, 2021
Daikin’s head of collaboration startups, Taro Mitani said that their new business model is part of their push to adopt digital services. He said, “We wanted to try a new operational model.” Initially, they plan to reach 50,000 subscriptions for AC services and eventually shift to other businesses like beauty parlors, etc.
Though the push came as Tesla is known to enter the business, the idea has been there within Daikin all along. It was a result of a conversation between Daikin Chairman and CEO of Wassha, Noriyuki Inoue, and Satoshi Akita. As a result, both teamed up for the fee collection process in this aspect. It was while listening to Akita’s experiences in Africa Daikin thought of breaking away from traditional services of just manufacturing and sales.
Tesla effect
It is reported that Tesla’s possible entry into the industry is pushing things forward. But it was back in September Elon Musk mentioned the new pet project, home-HVAC (Heater, Ventilation, and Air-Conditioning) system. 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, in March Musk tweeted about home HVAC systems.
Sure would love to do home hvac that’s quiet & efficient, with humidity control & HEPA filter
— Elon Musk (@elonmusk) March 24, 2020
Musk’s target is nowhere close to Africa, possibly will start with American customers. As they haven’t entered the market, they will need to test their models and then expand globally. However, Daikin already being in the industry 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 airconditioners all over the world.
If not Tesla, other electronics companies are in line with the African market as their targets like Korea’s LG Electronics and China’s Midea Group. It is known that the maintenance services are not prevalent in the location, despite providing affordable prices. It is identified by Daikin that 7 out of 10 AC units were broken or needed repair in the country. In the deal with Wassha and Daikin, customers will also be able to rent LED lanterns.
Image credits- Asia Nikkei