FTC’s plan to collect hefty fine from Mercedes-Benz seen as hardly feasible

Police and fire authorities and Mercedes-Benz officials conduct a joint investigation into the cause of a fire involving the carmaker’s EQE electric sedan in Incheon, Aug. 8, 2024. Korea Times photo by Park Si-mon

The nation’s antitrust watchdog is unlikely to collect the full amount of the hefty fine it imposed on Mercedes-Benz Korea over the carmaker’s electric vehicle (EV) fire scandal, as inconclusive findings on the cause of the blaze make it difficult to assign direct responsibility to the carmaker, experts said Wednesday.

The outlook came in response to the Fair Trade Commission’s (FTC) high-profile penalty of 11.2 billion won ($7.6 million) imposed on the carmaker. The authority said Tuesday that the company misled consumers about the batteries used in its EQE electric sedan, effectively deceiving customers in an effort to boost sales in Korea.

However, industry experts said the likelihood of the authority collecting the fine is very slim due to weak legal grounds. Mercedes-Benz Korea expressed discontent over the sanction and said it plans to file an administrative lawsuit.

“The investigation by the National Forensic Service concluded that the cause of the blaze involving the EQE vehicle was undetermined, making it difficult to hold the carmaker fully responsible for the incident,” said Kim Pil-soo, a professor of automotive technology at Daelim University.

In August 2024, a EQE sedan with a battery from China’s Farasis Energy caught fire in an underground parking lot of an apartment complex in Incheon.

The FTC investigation found that the carmaker “deliberately concealed” information on the battery maker during its sales activities here. According to the FTC investigation, the carmaker’s dealers were encouraged to promote that the model was equipped with certain batteries from CATL, a better-known battery brand.

The Mercedes-Benz star logo is seen on the front of a vehicle at the carmaker’s plant in Sindelfingen, southern Germany, Feb. 12. AFP-Yonhap

“The investigation, however, concluded that the cause was unknown, so it is not easy for the authority to clearly distinguish whether the responsibility for the fire lies with Mercedes-Benz or the battery manufacturer,” Kim said.

There may be some responsibility on the part of the carmaker due to what appeared to be problematic sales practices, but it remains controversial whether the company should shoulder the full financial burden of the fine, Kim said.

He also pointed out that the forensic report included a clause suggesting that external factors — such as physical shocks or impacts from road obstacles like speed bumps — could not be ruled out.

Lee Ho-geun, a professor of automotive engineering at Daeduk University, said the FTC’s decision appears to be more of a symbolic warning than a penalty that can realistically be fully enforced.

“It will be extremely difficult for the watchdog to collect the entire amount of fines, as proving that the Farasis battery itself has a serious defect is very difficult,” Lee said.

Lee went on to argue that the severity of the fire is not on par with past scandals involving widespread environmental damage, such as emissions manipulation cases that caused significant social and environmental harm.