Mercedes just made a huge play that could threaten Tesla's home battery business

Mercedes-Benz is taking a direct shot at Tesla's solar push and growing battery business.

The luxury carmaker is exclusively partnering with Vivint Solar to sell a smart solar ecosystem to California residents, taking a direct shot at Tesla's new solar roof roll-out on its home turf.

As part of the partnership, Mercedes will introduce its at-home battery to the US market for the very first time while Vivint provides the solar panel installation. The solar installer will also provide a smart home experience; Vivint announced a partnership with Vivint Smart Home at CES in January, allowing the company to utilize sensors and artificial intelligence to automatically manage energy loads.

The move follows a progression in the solar industry started by Tesla CEO Elon Musk of rolling battery and solar installations into one process.

Rechargeable batteries are necessary for storing the electricity generated by solar panels, which can then be used during peak grid times. But prior to Tesla's acquisition of SolarCity last November, battery and solar installations were two separate processes.

"We see this as an evolving appetite that consumers are asking us to bring to them," Vivint CEO David Bywater told Business Insider.

Mercedes' bet over Tesla

Mercedes rolled out its standing battery in Germany last April, but has since expanded to the United Kingdom and South Africa.

The device, which is manufactured at Mercedes' subsidiary Deutsche ACCUMOTIVE, stores 2.5 kWh of energy. Batteries can be combined, however, to store up to 20 kWh of energy. The fully installed cost will range from just under $5,000 to $13,000 for a 20 kWh system.

That does compete with Tesla price-wise, but there's a catch.

Tesla's Powerwall 2, which stores 14 kWh of energy, can cost as much as $11,450, including installation. Although it stores slightly less energy than Mercedes' full system, you only need one Powerwall unit instead of several Mercedes batteries.

Those looking to save on space may opt for the Powerwall 2, which can also be mounted on a wall.

For reference, the average US residential home uses 901 kWh of electricity per month, according to the US Energy Information Administration.

But Boris von Bormann, CEO of Mercedes' energy division, said there's plenty of room in the market for multiple players, adding that Mercedes has an edge when it comes to quality.

"[Mercedes is] not a startup, it's not a stock-value driven company with some velocity behind it that can go one way or another," von Bormann said. "It's really a mature company that will be there and will be there for the foreseeable future. That way you feel trusted and have a quality brand where you get support whenever you need it."

Tesla has taken some heat for its stock valuation that has matched the levels of Ford and General Motors, despite selling a fraction of vehicles.

Tesla is currently looking to improve solar adoption by offering a more aesthetically appealing solar shingle product, which the company began selling this month.

Both Tesla and Mercedes see at-home batteries as an extension of their electric car plans.

Musk made that much clear during his initial solar roof unveiling, where he discussed how a solar push allows for the full integration of Tesla products: a Powerwall that both stores solar energy and juices up your electric car.

"We're not just looking at energy storage as a pure storage play, but looking strongly at it from an electric vehicle perspective as well with the expansion of Daimler into EVs," von Bormann said.

For now, Mercedes will leverage its partnership with Vivint to role out its rechargeable battery in California. But the two may expand to other states based on consumer interest. Mercedes is also interested in exploring markets like China and Australia.

Get the latest Tesla stock price here.