Mercedes-Benz fined $7.6 million in South Korea over dispute with EV battery supplier
Mercedes-Benz, the world’s leading luxury car manufacturer, is facing a major regulatory dispute in South Korea. The country’s competition regulator, the Korea Fair Trade Commission (FTC), has fined the company 12.23 billion won (about $7.6 million or about Rs 63 crore) .
The action follows an investigation that found the company provided misleading information to customers about the supplier of batteries used in its electric vehicles . According to the investigation, Mercedes-Benz Korea did not provide transparent information about the battery supplier for certain EV models and concealed information about the actual supplier.
The case highlights concerns about transparency, safety and consumer rights in the electric vehicle sector .
Allegations of wrong information regarding battery supplier
According to an FTC investigation, Mercedes-Benz Korea, while promoting some of its electric vehicles, claimed that the batteries in them were made by CATL, the world’s largest EV battery manufacturer.
But investigations revealed that the battery cells in many of the vehicles were actually made by Farasis Energy , a relatively less well-known supplier.
The models named in the controversy include the company’s premium electric sedans, such as:
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Mercedes-Benz EQE
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Mercedes-Benz EQS
The investigation found that the company’s internal sales manuals for dealers detailed the advantages and technical superiority of CATL batteries, but made no mention of Farasis batteries.
Because of this, many dealers remained unaware of the actual battery supplier and kept informing customers that they had CATL batteries when purchasing an EV .
Investigation launched after battery fire incident
This matter came to light when a serious incident occurred in Incheon city of South Korea in August 2024.
A Mercedes-Benz EQE electric car parked in the underground parking area of an apartment complex caught fire due to a battery-related fire. It was later discovered that the vehicle was equipped with a Farasis Energy battery.
Causes of this accident:
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More than 100 vehicles parked nearby were destroyed.
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Many residents of the apartment building were immediately evacuated
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There was extensive damage to the parking area and property.
Following the incident, South Korean authorities launched a detailed investigation into Mercedes-Benz Korea’s EV battery information and marketing practices .
Around 3,000 vehicles affected
The investigation revealed that Mercedes-Benz Korea sold around 3,000 electric vehicles fitted with Farasis Energy batteries between June 2023 and August 2024 .
The total sales value of these vehicles is said to be around 281 billion won .
According to South Korean law, if a company indulges in unfair trade practices , the regulatory body can impose a fine of up to 4% of the value of the related sales.
The FTC said the maximum level of fine was imposed due to the seriousness of the matter and concerns about public safety .
Additional FTC orders
Apart from imposing the fine, the regulatory body has also given several instructions to Mercedes-Benz Korea.
These primarily include:
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Providing clear and transparent information about the batteries used in EV models
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Incorporating accurate technical information into future marketing and sales materials
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Providing dealers and customers with accurate information about battery suppliers
Along with this, FTC has also sent this matter to the prosecutors for further investigation .
Mercedes-Benz’s response
Mercedes-Benz Korea responded to the FTC’s decision, saying the company respects the regulatory body’s decision , but does not agree with its conclusions.
The company says it is considering legal options to challenge the decision .
Mercedes-Benz Korea is likely to file an administrative lawsuit in this matter and challenge the FTC’s decision in court.
Increasing regulatory oversight in the EV industry
The case also highlights growing concerns about transparency and safety standards in the electric vehicle industry .
EV adoption is rapidly increasing worldwide, and governments and regulatory bodies want to ensure that:
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Battery technology is safe
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Provide accurate technical information to companies
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Consumers should not be misled
EV batteries are the most important and expensive part of any electric car, so transparency regarding their suppliers, technology, and safety standards is considered crucial.
The $7.6 million fine imposed on Mercedes-Benz in South Korea is an important signal for the electric vehicle industry.
This case demonstrates that a lack of transparency regarding battery technology and supplier information can pose serious legal and reputational risks for companies.
As electric vehicles grow in popularity around the world, governments and regulatory bodies are becoming more stringent regarding safety, transparency and consumer protection .
For Mercedes-Benz and other automobile companies, this incident is a stark reminder that while EV technology is rapidly evolving, accurate information and responsible marketing are equally important.
