South Korea Slaps Mercedes-Benz with Hefty Fine for Deceptive EV Battery Information
In a significant regulatory action, South Korea's antitrust watchdog, the Korea Fair Trade Commission (FTC), announced on Tuesday that it has levied a substantial fine of 11.2 billion won (approximately $7.61 million) against Mercedes-Benz. The penalty stems from allegations that the luxury automaker misled consumers regarding the battery suppliers used in certain electric vehicle (EV) models, marking a notable enforcement in the rapidly evolving EV market.
Misleading Sales Guidelines and Undisclosed Battery Suppliers
The FTC revealed that Mercedes-Benz circulated internal sales guidelines to its dealers, explicitly stating that all EQE and EQS electric vehicles were equipped with battery cells from Contemporary Amperex Technology Co Ltd (CATL), the world's largest battery manufacturer based in China. However, the investigation uncovered that some of these models were actually fitted with battery cells supplied by Farasis Energy, another Chinese company. This critical detail was omitted from the sales materials and was not disclosed to either dealers or consumers, constituting a breach of fair trade practices.
According to industry data from SNE Research, CATL dominated the global EV battery market with a 39% share in 2025, while Farasis Energy did not rank among the top 10 suppliers. This discrepancy in supplier reputation and market standing underscores the potential impact on consumer trust and purchasing decisions, as buyers may have been influenced by the association with a leading brand like CATL.
Investigation Triggered by Safety Incident and Sales Impact
The FTC's probe was initiated following an incident in August 2024, when a Mercedes EV caught fire in an underground parking facility in Incheon. Subsequent analysis revealed that the battery cells involved were manufactured by Farasis Energy, raising concerns about transparency and safety. The regulator estimated that approximately 3,000 vehicles equipped with Farasis battery cells were sold between June 2023 and August 2024, generating total sales of around 281 billion won.
The imposed fine of 11.2 billion won represents about 4% of the related sales revenue, which the FTC noted is the maximum penalty allowable under South Korean law for such unfair business practices. An official from the commission confirmed that both Mercedes-Benz's German headquarters and its Korean subsidiary will jointly bear the financial burden of the fine.
Legal Repercussions and Broader Implications
In addition to the monetary penalty, the FTC has decided to refer both the German headquarters and the Korean unit to prosecutors for further legal action. The regulator asserted that these entities were directly or indirectly involved in the preparation and distribution of the misleading sales guidelines, highlighting systemic issues within the company's compliance and communication channels.
This case serves as a stark reminder of the increasing scrutiny faced by automakers in the competitive EV sector, where battery technology and supplier credibility are pivotal factors. It underscores the importance of accurate information disclosure to maintain consumer confidence and adhere to regulatory standards, as governments worldwide ramp up efforts to ensure fair trade and safety in the transition to electric mobility.
