Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
FTC’s regulatory push clouds Mercedes-Benz Korea’s EV prospects
Police investigators and Mercedes-Benz Korea officials inspect one of the carmaker's EQE sedans, which caught fire in the underground parking lot of an apartment complex in Incheon, Aug. 8, 2024. Korea Times photo by Park Si-mon
By Lee Min-hyung
German carmaker refutes watchdog's internal conclusions
Mercedes-Benz Korea faces another major regulatory risk in its electric vehicle (EV) business, as the Fair Trade Commission (FTC) is on the verge of slapping sanctions on the carmaker for advertising allegedly deceptive battery information.
The investigation was the result of a controversy dating back to August last year, after one of the carmaker’s EQE electric sedans caught fire in the underground parking lot of an apartment complex in Incheon. The fire caused significant damage to the facility and to hundreds of vehicles parked nearby.
Last week, the antitrust watchdog reached the conclusion that the local subsidiary of the German luxury carmaker should be sanctioned for its alleged violation of fair trade and advertising acts and notified the company accordingly.
The company is suspected of having claimed in promotional materials that the vehicle’s battery was sourced from CATL, the world’s largest battery firm, but the car involved in the fire was actually equipped with a battery manufactured by Farasis Energy, a less popular Chinese brand.
The FTC has since conducted multiple on-site inspections of the carmaker’s headquarters and dealerships before reaching its latest conclusion.
The level of punishment has yet to be confirmed. There are plans to hold a meeting with Mercedes-Benz Korea in the near future before finalizing the sanctions.
Once confirmed, the sanctions will deal an additional blow to the carmaker’s EV business in Korea, compounding its plummeting EV sales following the devastating fire.
Damaged vehicles are seen at an apartment parking lot in Incheon, Aug. 2, 2024, in the aftermath of a devastating fire started from a Mercedes-Benz Korea's EQE electric sedan. Yonhap
The FTC can impose a fine of up to 4 percent of sales from specific products when a vendor is determined to have violated the fair trade act.
Mercedes-Benz Korea pushed back against the FTC's latest decision, arguing that the allegations it raised are “groundless.”
"While we respect the opinion by the FTC, we do not agree with the conclusions presented in the examiner's report, as they do not reflect our legal assessment," the carmaker said in a statement, Tuesday. "We consider the allegations to be unfounded."
The latest regulatory push by the FTC clouds the outlook for any potential EV sales rebound for the company.
According to data from the Korea Automobile Importers & Distributors Association, Mercedes-Benz Korea sold a total of 768 EVs in the first half of this year, down 72.2 percent from the previous year.
During the same period, by comparison, Audi Korea outperformed Mercedes-Benz Korea in sales. Audi Korea’s total number of EV sales increased 6.2 percent to 1,826 between January and June this year from a year earlier. BMW Korea, another rival, saw its EV sales fall only 16.7 percent during the same period.