Tesla Motors, a maker of luxury electric sedans, is generating a lot of buzz with its new battery system, the Powerwall, in a young energy storage market dominated by Korea’s top battery makers ― Samsung SDI and LG Chem.

The Powerwall is a large battery that helps homeowners manage their energy use. It can be paired with solar panels or work alone. Installed batteries are then connected to the Internet and can be managed by Tesla.

Customers are reacting explosively to the sleek device, which uses the same Panasonic batteries that are used in Tesla’s hot-selling Model S sports cars. The company said preorders had exceeded 38,000 units.

“Our goal here is to fundamentally change the way the world uses energy,” Tesla’s celebrity CEO Elon Musk said during the unveiling event on April 30. 

Energy storage is a rapidly growing market with policies and incentives making it more economically feasible to sell battery systems to businesses and utilities.

Increased electric car sales are also spurring the business, as they use the same lithium-ion batteries ― a boon for Samsung SDI and LG Chem, the top automotive battery makers.

Samsung SDI was the No. 1 player in the energy storage market last year, with a 23.6 percent share, followed by LG Chem with 20 percent. When it comes to automotive batteries, LG Chem was the market leader with a 30.4 percent share, compared with Samsung SDI’s 19.1 percent.

About the recent hype created by Tesla, the two companies seemed more excited about the expansion of the market than intimidated by the new challenger.

While Tesla will ramp up production at its new Nevada Gigafactory, Samsung SDI, the sole battery supplier of BMW’s electric vehicles, is also working on its own giant battery plant that would help reduce battery prices. For energy storage, the company is focusing more on Japan and Europe.

LG Chem is recently making a big push in the North American market, where home energy storage is expected to surge from this year’s capacity of 49 megawatts to 950 megawatts by 2020.

The company has expanded partnership with U.S. energy companies, including South California Edison, AES and Gexpro. In April, it also announced its entry into the home battery market through a joint venture with Eguana Technologies.

“Energy storage is a combination of batteries, systems and utilities. We have secured strong ties with local partners,” said an LG Chem official. “Material prices will fall gradually not just for Tesla but also for us.”

Industry watchers also predicted no serious impact on the two Korean players from Tesla, but pointed out pricing would become a key factor in the future competition.

Depending on storage capacity, Tesla’s Powerwall will carry a suggested price of $3,000 for a 7 kilowatt model and $3,500 for 10 kilowatts. Installation will be extra. The company also hinted the prices could be lowered when full-fledged production starts at its new plant.

Unlike Tesla, Samsung SDI and LG Chem currently depend on utility providers in deciding supply prices.

“The Tesla pricing is cheaper than expected but still expensive for individual homeowners,” said a local analyst declining to be named. “Korean firms are more likely to target businesses and utilities for better profits.”

By Lee Ji-yoon(jylee@heraldcorp.com)