South Korea’s FTC has fined Mercedes-Benz $7.61 million for deceiving consumers about the battery suppliers in its electric vehicles, a deception linked to a devastating parking lot fire that shook public confidence in EVs.
The Korea Fair Trade Commission (FTC) announced Tuesday that Mercedes-Benz had distributed internal sales guidelines to dealers falsely implying that all EQE and EQS electric models were equipped with battery cells manufactured by Contemporary Amperex Technology Co. Ltd., better known as CATL, the Chinese battery giant that commands a dominant 39% share of the global EV battery market.
In reality, a significant portion of those vehicles had been quietly fitted with cells from a far lesser-known Chinese supplier: Farasis Energy, a company that doesn’t even rank among the world’s top ten battery manufacturers.
In August 2024, a fire broke out in an underground parking garage in Incheon, one of South Korea’s largest cities. The blaze, which drew widespread public alarm and renewed fears about EV battery safety, led investigators to examine the vehicle at the center of the incident. What they found set off a regulatory firestorm of a different kind: the battery cells inside were made not by CATL, as consumers and dealers had been led to believe, but by Farasis Energy.
For Korean consumers, the revelation hit a raw nerve. South Korea has grappled with a string of high-profile EV battery fires in recent years, and public scrutiny of battery quality and transparency has never been higher. The idea that a luxury automaker of Mercedes-Benz’s stature had obscured such information from buyers struck many as a profound breach of trust.
According to the FTC, approximately 3,000 vehicles containing Farasis battery cells were sold in South Korea between June 2023 and August 2024, generating combined sales of roughly 281 billion won. Yet throughout that period, neither dealers nor consumers were ever told that the batteries in their vehicles came from a supplier other than the world-renowned CATL.
The distinction matters enormously to buyers in this market. CATL’s reputation as the global leader in EV battery technology carries significant weight with South Korean consumers, many of whom factor battery provenance directly into their purchasing decisions—particularly in the wake of safety incidents. Farasis Energy, by contrast, is a comparatively obscure supplier with nothing close to the same market standing or brand recognition.
The FTC said Mercedes distributed the misleading sales guidelines to its dealer network, effectively ensuring that frontline sales staff would pass on inaccurate information, whether knowingly or not, to customers parting with premium prices for luxury electric vehicles.
The 11.2 billion won fine represents approximately 4% of the revenues tied to the affected vehicle sales, and crucially, regulators confirmed it is the maximum penalty permissible under South Korean law for this category of unfair trade practice. The FTC made clear that leniency was not on the table.
An FTC official confirmed that both Mercedes-Benz’s German headquarters and its South Korean subsidiary would jointly bear the financial penalty, a detail that signals regulators view the misconduct as having originated at the highest levels of the organization rather than as a localized compliance failure.
More ominously for Mercedes, the FTC announced it would refer the case to prosecutors—targeting both the German parent company and the Korean unit. Investigators concluded that the two entities were involved “directly or indirectly” in creating and distributing the deceptive sales materials, raising the spectre of criminal liability on top of the civil fine.
The fine and criminal referral represent a significant reputational blow for Mercedes-Benz in one of Asia’s most competitive and brand-conscious automotive markets. The EQE and EQS sit at the pinnacle of the company’s electric vehicle lineup, marketed on promises of cutting-edge engineering and uncompromising quality. The revelation that the company obscured basic information about a core component from paying customers undermines that carefully cultivated image.
As of the time of publication, Mercedes-Benz had not issued a comprehensive public response addressing the FTC’s findings.
The case is likely to reverberate well beyond South Korea’s borders, raising pointed questions about transparency standards in the global EV industry—and whether consumers elsewhere have been given the full picture about what powers the vehicles they drive.
WHAT YOU SHOULD KNOW
South Korea’s FTC has fined Mercedes-Benz $7.61 million—the maximum penalty allowed by law—for deceiving consumers about the battery suppliers in its EQE and EQS electric vehicles.
The automaker misled buyers into believing all units were fitted with industry-leading CATL batteries, when roughly 3,000 vehicles were actually equipped with cells from the far lesser-known Farasis Energy.
The cover-up only unraveled after a 2024 EV fire in Incheon exposed the discrepancy. Beyond the fine, both Mercedes’ German headquarters and its Korean unit now face criminal prosecution. The bottom line: a luxury brand chose concealment over transparency on a safety-relevant issue and is now paying the legal and reputational price for it.
