Tesla is aiming big with its energy storage business but not without attracting some eyeballs from close competitors. Mercedes is reportedly rolling out stationary storage applications for homes in Germany already

Published By: Eunice Gettys on April 29, 2016 07:54 am EST

Tesla Motors Inc (NASDAQ:TSLA) has been all about electric vehicles, but with the company’s massive 10 million square feet battery plant dubbed Gigafactory quietly standing up, the company could prove to be a major disruption in the energy storage space.

Riding on the back of strong demand in excess of 38,000 pre-orders, particularly for the home battery unit Tesla calls the “Powerwall”, Tesla is anxious to ramp up production for its stationary storage applications. But its luxury automaker peer from Germany, Mercedes Benz, owned by Daimler AG (OTCMKTS:DDAIF) is moving in that direction too.

According to a report from technology website Tech crunch, Mercedes, which until last year was making energy storage units for larger industrial scale use, is now manufacturing smaller units like the Powerwall for use in the average German home.

A single Mercedes’ battery unit which packs on 2.5 kWh battery modules can be grouped with maximum seven others for a total output of 20 kWh to result in “virtually no losses” when coupled with solar panel systems, much like the Powerwall which Tesla touts as more effective when paired with solar panels from Tesla’s sister company SolarCity.

Tech crunch notes, Mercedes’ energy storage units are being manufactured at the company’s subsidiary, Deutsche ACCUMOTIVE and are being sold via partnerships with utilities and solar technology companies, albeit in Germany only for now. Mercedes does aim to eventually sell its home stationary energy storage applications worldwide soon. The website claims that the company has already invested more than $500 million to develop a second battery plant at Deutsche ACUMOTIVE which it hopes will begin operations by summer of 2017.

Those plants perhaps still will be no match for Tesla’s Gigafactory being built for about $5 billion dollars to support volumes of up to 500,000 battery packs a year at full capacity for electric cars as well as energy storage applications like the Powerwall.

Besides larger volumes, another advantage Tesla will gain is on the cost end. Tesla’s CEO Elon Musk has mentioned that at full capacity, the Gigafactory could help strip costs by as much as 30% - a factor that could greatly boost long term profitability as well as allow greater control over pricing.

Tesla’s Powerwall sells for $3,500 currently with the potential to be priced even lower in the future as the Gigafactory goes operational, probably later this year. Mercedes’ units’ price is not out yet.