The controversy surrounding Mercedes-Benz Korea’s disclosure of electric vehicle battery cell manufacturers is escalating into a consumer compensation dispute. After South Korea’s Fair Trade Commission (FTC) determined that Mercedes-Benz had misled consumers over battery information and imposed a hefty fine, the Korea Consumer Agency has launched a collective dispute mediation process, putting potential compensation for affected vehicle buyers at the center of the issue.
The Consumer Dispute Mediation Commission under the Korea Consumer Agency recently decided to initiate collective dispute mediation proceedings over Mercedes-Benz Korea’s disclosure of battery cell manufacturer information for its electric vehicles.
The case was initiated after 53 consumers sought compensation from Mercedes-Benz Korea. They claim they were given battery manufacturer information that differed from the cells actually installed in certain EQE vehicles they purchased from June 2023 onward. The commission determined that the case met the requirements for collective dispute mediation, citing the fact that more than 50 consumers were involved and that the case shared common factual and legal issues.
Five models are covered by the mediation proceedings: the EQE 350+, AMG EQE 53 4MATIC+, EQE 350 4MATIC, EQE 500 4MATIC SUV and EQS 350. According to battery information Mercedes-Benz Korea disclosed in August 2024, these models were equipped with battery cells supplied by China’s Farasis Energy. At the time, Mercedes-Benz disclosed that Farasis cells were used in major EQE variants excluding the EQE 300, as well as the EQE 500 4MATIC SUV and EQS 350.
The consumers’ complaint centers not on the performance of the batteries themselves, but on the information provided during the vehicle purchase process. They claim Mercedes-Benz’s official dealers represented the vehicles as being equipped with batteries from CATL, even though the vehicles actually contained Farasis cells.
An FTC investigation found that Mercedes-Benz had prepared and distributed sales guidelines for EQE and EQS models in June 2023 that listed CATL battery cells instead of the Farasis cells actually used in the vehicles. The sales guidelines were provided to dealers for use during the vehicle sales process.
In March, the FTC concluded that the conduct constituted deceptive behavior that interfered with consumers’ ability to make informed purchasing decisions. It imposed a combined fine of KRW 11.239 billion on Mercedes-Benz’s German headquarters and Mercedes-Benz Korea and decided to refer both companies to prosecutors.
The FTC applied a 4% penalty rate to approximately KRW 281 billion in related sales, representing the maximum rate permitted under the relevant rules. The regulator said battery cell manufacturer information was important to consumers because it could affect vehicle safety perceptions and purchasing decisions. Reuters also reported that approximately 3,000 vehicles equipped with Farasis batteries were sold between June 2023 and August 2024, generating about KRW 281 billion in related sales.
The collective dispute mediation process is separate from the FTC’s administrative sanctions. While the FTC’s action concerns violations related to Mercedes-Benz’s advertising, sales and disclosure practices, the consumer mediation process will determine whether the company is responsible for compensating individual buyers for damages they allegedly suffered.
The key issues in the mediation are therefore expected to include what battery information consumers actually received when purchasing their vehicles, whether that information influenced their purchasing decisions, and how the battery manufacturer affected the economic value of the vehicles.
The FTC’s finding that Mercedes-Benz’s sales guidelines contained battery manufacturer information that differed from the batteries actually installed could provide important evidence for the consumers. However, the FTC’s administrative decision does not automatically establish the amount of damages suffered by individual consumers or determine Mercedes-Benz’s civil liability. Those issues will have to be separately considered in the collective mediation process.
The controversy came to a head following a fire involving a Mercedes-Benz EQE electric vehicle in an underground parking garage at an apartment complex in Cheongna, Incheon, last year. The incident prompted heightened public scrutiny of the battery manufacturers used in Mercedes-Benz EVs.
In response to consumer and market demands, Mercedes-Benz Korea disclosed the battery cell manufacturers of its electric vehicles sold in South Korea on its website in August 2024. The disclosure showed that the EQE 350+, which was involved in the Cheongna fire, as well as the AMG EQE 53 4MATIC+, EQE 350 4MATIC, EQE 500 4MATIC SUV and EQS 350 were equipped with Farasis battery cells.
The subsequent FTC investigation found evidence that some vehicles had been marketed with battery manufacturer information that differed from the cells actually installed. The investigation ultimately resulted in the KRW 11.2 billion fine and referral to prosecutors announced in March. Mercedes-Benz Korea has said it disagrees with the FTC’s findings and will take the necessary legal steps.
The dispute has now moved to the Consumer Dispute Mediation Commission. The Korea Consumer Agency plans to publish notices of the collective mediation proceedings on its website and in daily newspapers for at least 14 days and accept additional applications from affected consumers. After the public notice period ends, the mediation process will proceed under the Framework Act on Consumers.
The eligible purchase period runs from June 8, 2023, through August 12, 2024. Consumers who purchased the relevant vehicles through an official Mercedes-Benz Korea dealer during this period after being told that the vehicles were equipped with CATL batteries may participate in the collective dispute mediation by submitting supporting documents, including their purchase contracts.
If the mediation ultimately results in compensation, Mercedes-Benz’s potential financial burden could extend well beyond the 53 consumers who initially filed claims, depending on the number of additional consumers who join the proceedings. At the same time, Mercedes-Benz is continuing its legal response to the FTC’s decision, meaning disputes over the facts and the company’s legal liability could continue throughout the mediation process.
The case could also have broader implications for battery disclosure standards across the automotive industry. Batteries are a critical component of electric vehicles, affecting not only driving range and charging performance but also vehicle value and safety. As a result, battery cell manufacturers and suppliers have become increasingly important factors in consumers’ purchasing decisions.
The case is particularly significant because the FTC treated battery cell manufacturer information not merely as a technical specification but as material information that could influence consumers’ purchasing decisions. The outcome could therefore prompt automakers to adopt more stringent standards for disclosing battery supply-chain information when selling electric vehicles.
