South Korea Hits Mercedes-Benz with Maximum 7.6 Million Dollar Fine for Misleading EV Battery Disclosures Following Incheon Fire

South Korea fines Mercedes-Benz 11.2 billion won for misleading customers about EV battery suppliers following a 2024 fire investigation in Incheon.

By: AXL Media

Published: Mar 10, 2026, 8:24 AM EDT

Source: The information in this article was sourced from CNA

The Discovery of Deceptive Battery Sourcing

Mercedes-Benz faces a significant regulatory crisis in South Korea following revelations that it misrepresented the origin of battery cells in its luxury electric vehicle lineup. According to the Korea Fair Trade Commission (KFTC), the automaker marketed its high-end EQE and EQS models as featuring cells from CATL, the global market leader with a 39 percent market share in 2025. However, internal dealer guides and marketing materials omitted the fact that thousands of these vehicles were actually equipped with batteries from Farasis Energy, a supplier that does not rank among the world's top ten. This lack of transparency has been categorized by regulators as a deliberate attempt to leverage a "premium" brand image while utilizing less recognized components.

The Catalyst: August 2024 Incheon Parking Lot Fire

The KFTC’s investigation was accelerated by a dramatic EV fire that occurred in an underground parking garage in Incheon in August 2024. Forensic analysis of the vehicle involved—a Mercedes EV—revealed that its battery cells were manufactured by Farasis Energy, contradicting the consumer expectation of CATL hardware. This incident sparked a national conversation in South Korea regarding EV safety and the right of consumers to know the specific manufacturers of critical components. The regulator noted that approximately 3,000 vehicles containing the Farasis cells were sold between June 2023 and August 2024, generating roughly 281 billion won in revenue.

Maximum Legal Penalty and Criminal Referrals

The 11.2 billion won (US$7.61 million) fine represents the maximum penalty allowed under South Korean law for unfair marketing practices, calculated at 4 percent of the related sales. Beyond the financial impact, the KFTC has taken the aggressive step of referring both the German headquarters and Mercedes-Benz Korea to prosecutors. The regulator alleges that both entities were directly or indirectly involved in the creation and distribution of the misleading sales guidelines. This dual-accountability approach underscores the severity with which South Korean authorities are now viewing transparency in the rapidly expanding electric vehicle sector.