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Mercedes-Benz hit with $7.65M fine for allegedly burying battery maker

Published: 10 Mar. 2026, 19:44

Mercedes-Benz' 2025 EQS SUV [MERCEDES-BENZ]

Mercedes-Benz has been fined 11.24 billion won ($7.65 million) for allegedly misleading consumers by concealing the manufacturer of batteries used in its EVs and suggesting they were made by China’s CATL, the world’s largest battery maker.

Korea’s Fair Trade Commission (FTC) said Tuesday it issued corrective orders, including a prohibition order and public disclosure order, to Mercedes-Benz Korea and its German headquarters, along with a fine of 11.24 billion won. The agency also referred both entities to prosecutors, saying further investigation is necessary.

Mercedes-Benz distributed sales guidelines in June 2023 to its partner dealerships containing key information about the battery cell manufacturers used in the company’s electric models EQE and EQS. The document indicated that all vehicles were equipped with CATL battery cells, according to the FTC.

In reality, however, four of the six EQE models and one of the seven EQS models released at the time used batteries from Farasis Energy, a China-based manufacturer. The FTC concluded that both Mercedes-Benz Korea and the German headquarters were aware of the use of Farasis batteries but intentionally concealed or omitted the information from the sales guidelines.

Battery cells are a key component that determines the performance and safety of EVs, and information about the manufacturer can significantly influence consumers’ purchasing decisions.

Farasis had previously issued a recall in China in 2021 due to fire risk concerns, prior to the launch of Mercedes-Benz EVs, and holds only around 1 to 2 percent of the global market share. Despite this, Mercedes-Benz emphasized the strengths of CATL batteries in its sales guidelines, including explanations such as “the reason for choosing CATL” and highlighting CATL as the global market share leader.

Mercedes-Benz Korea distributed the sales guidelines to dealerships for use during the sales process. Dealerships were found to have sold the vehicles without knowing that Farasis batteries were installed, and the FTC therefore excluded them from the sanctions.

Vehicles are seen burned out in the underground parking lot of an apartment complex in Cheongna, Seo District, Incheon, on Aug. 2, 2024. A fire broke out at around 6:15 a.m. the previous day in a Mercedes-Benz electric vehicle parked on the first basement level of the apartment’s underground parking garage and was extinguished after 8 hours and 20 minutes. The blaze destroyed around 40 vehicles and caused heat and soot damage to more than 100 others. [YONHAP]

About 3,000 Mercedes-Benz EVs equipped with Farasis batteries were sold under the guidelines from June 2023, with total sales reaching 281 billion won.

Mercedes-Benz disclosed the battery manufacturer only after a fire broke out in August 2024 in a Farasis-equipped vehicle parked in the underground parking lot of an apartment complex in Cheongna, Incheon.

The FTC determined that the company’s conduct constituted “unfair customer inducement through deceptive means,” in which consumers were misled into believing the company’s products were significantly superior to their actual specifications.

The commission applied the maximum penalty rate of 4 percent of the relevant sales revenue when calculating the fine. This marks the first time the maximum rate has been applied in a case involving unfair customer inducement.

FTC Commissioner Hwang Won-chul said the decision could also help affected vehicle owners seek compensation.

“Victims may file damage claims in court based on the FTC’s sanctions, which could aid in consumer redress,” Hwang said.

Mercedes-Benz Korea said in a statement that it has provided accurate and correct information to the media and customers, adding that it plans to present its position through legal procedures, including administrative litigation.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY AHN HYO-SEONG [[email protected]]