Mercedes-Benz is facing major regulatory action in South Korea after authorities found the company misled customers about battery suppliers used in its electric vehicles. The country’s antitrust regulator has fined the automaker 12.23 billion won (about $7.6 million/Rs 63 crore) after investigating its marketing practices. The fine was announced by the Fair Trade Commission (FTC), which concluded that Mercedes-Benz Korea concealed information about the actual supplier of batteries used in some EV models sold in the country.
Misleading Battery Supplier Information
According to the FTC investigation, Mercedes-Benz Korea promoted some of its EV models as being equipped with batteries supplied by CATL, the world’s largest EV battery maker. However, authorities discovered that many of the vehicles were actually fitted with battery cells from a lesser-known supplier, Farasis Energy. The affected vehicles include premium electric sedans like the Mercedes-Benz EQE and Mercedes-Benz EQS.
The investigation revealed that Mercedes-Benz Korea distributed internal sales manuals to dealers highlighting the advantages of CATL batteries, including references to the company’s global market leadership and advanced technology. However, the documents reportedly made no mention of Pharis batteries, even though some vehicles used them. As a result, the dealers themselves were unaware of the actual battery supplier and continued to promote EVs as CATL batteries when communicating with customers.
Investigation into fire incident begins
The issue came under scrutiny in August 2024 after a battery fire in an EQE electric sedan parked in Incheon, South Korea. The vehicle was equipped with batteries from Farasis Energy. The incident occurred in an underground parking facility at an apartment complex and caused extensive damage.
Reports suggest that more than 100 vehicles parked nearby were destroyed, while residents had to be evacuated from the building. Following the incident, regulators launched a detailed investigation into Mercedes-Benz Korea’s EV battery disclosure and marketing practices.
Nearly 3,000 vehicles affected
Officials estimate that Mercedes-Benz Korea sold about 3,000 vehicles equipped with Farasis batteries between June 2023 and August 2024, generating sales of about 281 billion won. Under South Korean law, regulators can impose fines of up to 4% of the relevant selling price for unfair trading practices. The FTC said it decided to impose the maximum level of fine because of the seriousness of the case and the public safety concerns it poses.
In addition to the fine, the regulator has ordered Mercedes-Benz Korea to correct its marketing practices and provide transparent information about the battery suppliers used in its EV lineup. The case has also been referred to prosecutors for further investigation.
Mercedes-Benz disputes the decision
Mercedes-Benz Korea responded by saying it respects the FTC’s decision but disagrees with its findings. The company has indicated that it plans to pursue legal options, including filing an administrative lawsuit, to challenge the decision. The case highlights increasing regulatory scrutiny around EV battery transparency and safety, especially as electric vehicle adoption continues to accelerate globally.