Audi’s plan to build a car designed to rival Tesla’s Model X shows Elon Musk might face stiff competition in Europe -- and not just within the auto sector.

Battery makers in Europe are likely to follow the trend already seen across Australia and bring down prices to head off a potential competitive threat from Tesla’s Powerwall when it starts shipping next year.

“In many markets, we’re already seeing major manufacturers responding with lower prices,” said Bloomberg New Energy Finance’s head of energy storage analysis, Logan Goldie-Scot.

Ravi Manghani, GTM Research’s senior energy storage analyst, noted that Tesla’s $3,000 price point for a 7-kilowatt-hour Powerwall does not include inverter and installation costs, which could bump the cost up to near-current market levels.

“The impact [of the Powerwall] might not be as drastic as it’s made out" in Europe, said Manghani.

Even so, Tesla is expecting plenty of action in Europe.

The company already has a presence across much of Western Europe through its automotive distribution network. And it also unveiled a partnership with the German consumer energy company LichtBlick immediately after launching the Powerwall.

Most significantly, the 7-kilowatt-hour Powerwall variant, which allows for daily cycling over 10 years, appears to be made specifically for European markets where falling feed-in tariffs and high power prices are boosting interest in self-consumption.

“There is no place for the 7-kilowatt-hour product in the U.S. because of net energy metering policies,” said Goldie-Scot.

The high profile achieved by Tesla’s battery launch seems to have piqued the interest of European installers and resellers, with the Powerwall featured in a number of third-party booths at this year’s Intersolar Europe trade fair in Munich.

However, it is unclear how effectively Tesla will be able to capitalize on this interest when it starts shipping next year.

The company first needs to get manufacturing underway at its Nevada Gigafactory, which is expected to be partially commissioned next year and will not reach full capacity until 2020.

“There’s also a question over how much total demand Tesla could supply while production at the Gigafactory ramps up," said Goldie-Scot. That gives competitors some room to maneuver.

Audi’s Tesla-killer plans include partnerships with battery makers LG Chem and Samsung SDI and “bringing production of the latest battery-cell technology to the EU and strengthening European industry with this key technology,” according to a press release.

Furthermore, although analysts agree the Powerwall’s sleek, wall-mounted design could prove a lure for early-adopter residential customers, a number of German companies are already incorporating aesthetics into their household energy storage offerings.

E3/DC this year bagged a Red Dot Award for product design with its S10 energy storage unit, for example.

The S10 comes on a stand, which for some customers may be more convenient than trying to find a wall strong enough to hold the 220-pound Powerwall.

And even if Tesla does manage to shave a few thousand euros off the cost of a domestic energy storage system, in most European markets, the Powerwall is still likely to have a payback time that might stretch beyond the lifespan of the batteries.

The Powerwall comes with a 10-year warranty. German residential energy storage customers already get a 15-year warranty on Bosch or Saft batteries.

Furthermore, Bosch and Saft are both brands with a track record in the market, whereas there is still zero practical experience to back up Tesla’s performance and lifetime claims for the Powerwall.

Thus, it remains to be seen whether the 85 percent of Germansolarinstallers that are said to be keen to add storage to their portfolios will choose batteries from Tesla.

“Installers will want to give themselves options. This is why many battery vendors are also trying to sell direct to consumers. They are not sure a distributor or installer will pitch their product over a competing product," said Goldie-Scot.