South Korea imposes multi-million fine on Mercedes-Benz

The Korea Fair Trade Commission (KFTC) has stated that Mercedes-Benz advertised its EQE and EQS models as featuring premium battery cells from CATL. According to the authority, dealers were provided with sales guidelines stating that all EQE and EQS models were equipped with battery cells from CATL. However, certain model variants actually use battery cells from the Chinese company Farasis Energy. The KFTC noted that this information was missing from dealer manuals and marketing materials.Mercedes-Benz Korea said it respected the decision of the KFTC’s plenary session but strongly disagreed with the commission’s final ruling. The company added that it would take the necessary legal steps, including filing an administrative lawsuit, and emphasised that it had provided both the media and its customers with accurate and truthful information.The KFTC launched its investigation into Mercedes-Benz after it was revealed that the battery cells in a Mercedes electric vehicle that caught fire in South Korea were supplied by Farasis. The incident made headlines in mid-2024 when a major fire broke out in the underground car park of an apartment complex in Incheon. A Mercedes EQE was quickly identified as the source of the fire, which destroyed or damaged 140 vehicles and forced the evacuation of the residential building.Following this fire, the South Korean government demanded in August 2024 that car manufacturers disclose their battery suppliers. In the case of Mercedes-Benz, it emerged—something that is no secret in the industry—that all versions of the EQE saloon, as well as the EQE 500 4MATIC SUV and the EQS 350, use Farasis cells. The remaining EQS variants (saloon and SUV) and the EQE 350 4MATIC SUV are equipped with CATL cells in their underfloor battery packs.According to the KFTC, around 3,000 vehicles with Farasis battery cells were sold in South Korea between June 2023 and August 2024. The total revenue generated from these sales amounted to approximately 281 billion won. The fine of 11.2 billion won imposed by the regulatory authority corresponds to around 4% of the revenue, which is the maximum legally permissible penalty in the country for such unfair business practices. A KFTC representative told Reuters that the fine would be paid jointly by Mercedes’ German headquarters and its Korean subsidiary.reuters.com, koreabizwire.com, ftc.go.kr (in Korean)