Tesla to face fine over allegedly overstated mileage

Tesla Inc. has faced accusations in South Korea of failing to inform drivers of a sharp drop in the mileage of its electric vehicles at sub-zero temperatures, for which the country's antitrust body is planning to impose a fine of over 10 billion won ($8.4 million) against the US carmaker, according to the government and industry sources on Monday.

The Fair Trade Commission (FTC) recently reported the findings to Tesla. Its one-and-a-half year investigations into Tesla found that the EV maker had overstated the fuel mileage of its flagship models, including Model 3, the sources said.

The mileage for Tesla Model 3 Long Range was reduced by 38.8% to 273 km on a single charge, when it ran at temperatures below minus 7 because their battery performance degraded.

Tesla had stated Long Range was capable of 446.1 km of range on a single charge, which the FTC said constituted an overstatement.

The antitrust agency alleged that Tesla misinformed drivers by stating the distance its vehicles usually cover in warm places like the US state of California is their average mileage.

Considering an administrative fine for exaggerated advertisement is capped at a maximum of 2% of a company's annual sales, Tesla will likely face a fine of over 10 billion won, based on its South Korean sales of 1.1 trillion won last year.

The EV maker also will likely face another administrative fine for failing to return the fees it charged for online buyers, even though they canceled the orders, according to the sources. 

Tesla denied any wrongdoing and refuted the accusations, saying the advertised mileages for all EVs sold both in South Korea and abroad are based on the distance they cover at room temperature. 

It is preparing legal action against the administrative move through its legal representative in South Korea.

The FTC is joining South Korea's government ministries of energy, environment and transport, which have been stepping up pressure on Telsa in relation to government subsidies to EV buyers and recalls. 

FINE AGAINST MERCEDEZ-BENZ

Last week, the FTC imposed a fine of 20.2 billion ($17 million) won on Mercedez-Benz in relation to nitrogen oxide emissions.

The commission accused that the German carmaker's 15 models with diesel engines emitted nitrogen oxide, an air pollutant, by 5.8 to 14 times the permissible level, which contradicted its advertisement that the diesel sedans reduce nitrogen oxide emissions by up to 90%. 

The antitrust agency also said that Mercedez installed illegal software in its vehicles for the models sold between August 2013 and December 2016. It alleged that the software was designed to degrade the selective catalytic reduction system that tends to reduce the level of nitrogen oxide in the exhaust gas from the engine.

Mercedez’s South Korean operations said it had sincerely cooperated with the FTC’s investigation and would consider counteraction to the decision.

Write to Ji-Hoon Lee at lizi@hankyung.com
Yeonhee Kim edited this article