In August, a fire broke out in the underground parking lot of an apartment in Cheongna-dong, Incheon, involving an electric vehicle. The incident led to the burning or charring of around 800 nearby vehicles, while 1,500 residents had to evacuate. Approximately 20 residents inhaled smoke and were transported to the hospital. Electricity and water supply were cut off for about a week, forcing 800 residents to take refuge in temporary housing. This incident is recorded as the most severe EV fire incident in Korea.
Fear of electric vehicles (EVs) has spread. Notices recommending that EVs be parked above ground have been posted in apartment complexes nationwide, and some charging stations have been relocated above ground. The Seoul Metropolitan Government is pushing to revise the ‘Apartment Management Regulations’ to restrict EVs with a charge level below 90% from parking in underground parking lots. Sales of imported EVs have declined significantly, and Mercedes-Benz’s EVs have dropped out of the top 10 in sales rankings.
On October 10, approximately two months after the fire, 24 owners of the same model as the fire-damaged vehicle filed a class-action lawsuit against Mercedes-Benz’s headquarters, its Korean subsidiary, dealerships, and finance leasing companies. The vehicles in question are from the Mercedes-Benz EQ series equipped with Farasis batteries. The lawsuit revolves around two primary issues: whether Mercedes-Benz misled consumers about the battery manufacturer and if the company concealed any design flaws in the battery.
2022 Controversy over False Statements by Mercedes-Benz
The accusation that Mercedes-Benz misled customers regarding the battery manufacturer is central to the case. Mercedes-Benz had advertised that EQ models were equipped with batteries from CATL, the world’s top battery manufacturer. However, it was revealed that most models actually contain batteries from Farasis, a manufacturer ranked within the top 10 globally. The plaintiffs argue they would not have purchased the vehicles had they known Farasis batteries were used, thereby rendering their sales contracts invalid and entitling them to compensation for damages due to false advertising. In a 2022 interview with a Korean media outlet, Christoph Starzynski, Vice President overseeing Mercedes-Benz’s EV development, asserted that CATL batteries were used in EQ models and assured customers that there was "no need for concern" regarding battery-related fires.
Ha Jong-sun, the attorney representing the plaintiffs, stated, “Given the timeline of parts orders, the decision to use Farasis batteries would have been made at least three years ago,” adding that “the development head's mention of a different battery manufacturer constitutes a false disclosure on an essential matter.”
Additionally, it was revealed that Mercedes-Benz Korea’s official dealerships were instructed to highlight CATL batteries to Korean customers. This fact was confirmed in Mercedes-Benz Korea's internal training document, "2023 EQ Sales Playbook."
The issue of misleading advertising was also raised at a National Assembly audit hearing. On October 7, Matthias Beitel, CEO of Mercedes-Benz Korea, appeared as a witness and stated that “there was no intent to deceive consumers.” Meanwhile, the Fair Trade Commission is investigating whether Mercedes-Benz Korea deliberately provided incorrect information about EV batteries.
Battery safety and potential defects are also major issues. The plaintiffs argue that design defects in the Farasis batteries substantiate their false advertising claims. Farasis batteries have high energy density, which increases the risk of thermal runaway and thermal propagation. Mercedes-Benz, however, did not adopt designs to mitigate these risks, assuring customers that there was “no need for concern” regarding battery safety.
Farasis has stated on its website that it developed a module capable of stopping thermal propagation after just two cells. However, Mercedes-Benz did not adopt this module. The plaintiffs claim that this “failure to adopt the module” led to the thermal runaway, which could have been prevented.
The National Forensic Service's report, suggesting that “an external impact may have triggered the fire,” may weaken the plaintiffs' case by implying the possibility of an external cause. The plaintiffs argue that if the battery’s surrounding materials and structure are insufficient to prevent such impacts, this also constitutes a design defect. Attorney Ha noted, “Mercedes-Benz wrapped the bottom of the battery with only felt material, without an additional lower shield,” contrasting this with Tesla, which has a “bulletproof-grade” lower shield for added protection.
Attorney Woo Se-jong, who is preparing another class-action lawsuit, remarked, “Whether or not an automaker should add extra protection to the bottom of the battery varies by technical judgment,” adding, “It will be a point of contention during the trial.”
Potential Punitive Damages if Defects Were Concealed
The plaintiffs are also seeking punitive damages for alleged concealment of defects, arguing that Mercedes-Benz knew about the defect, or at the very least, became aware of it after the Cheongna fire on August 1 but took no action, such as issuing a recall.
Under the Motor Vehicle Management Act, if an automaker or parts manufacturer knowingly conceals, minimizes, or falsifies information about a defect, or fails to take corrective action, resulting in significant damage to life, health, or property, they may be liable for up to five times the damages. Given the 70 million won cost per battery pack replacement, punitive damages could reach up to 350 million won.
Mercedes-Benz has recalled some EV models in the U.S., following a fire incident with the 2023 EQE 350+ model in Florida, which occurred 22 hours after parking. The U.S. National Highway Traffic Safety Administration found a defect in the high-voltage battery management system (BMS).
It remains unconfirmed whether the domestic fire was caused by a BMS issue. However, the similarity between the incidents a year apart in Korea and the U.S., where the vehicle had been parked for approximately 60 hours, warrants attention.
Attorney Woo commented, “The Product Liability Act presumes a defect if the damage (fire) occurs while the product (vehicle) is in normal use, the damage results from a cause under the manufacturer’s control, and would not typically happen without a defect.” He added that “If a fire occurs with no external factor after an EV has been parked normally for a considerable time, it could be presumed to be due to a defect.”
Source: Sisa Journal (https://www.sisajournal.com)
