I'm curious... Where is the battery that exploded located? Does the car have one battery or two? Battery acid is nasty, but as stated above, insulation and sealed connectors in the wiring harness should be impervious to acid. They are designed to be water tight. When did the battery explode? While turning the engine? I believe that the reason most batteries explode is that H gas inside leaks out and gets ignited by a spark. Modern sealed gel batteries aren't supposed to do this. While truly unfortunate, MB picking up half the repair out of warrenty seems reasonable to me. I would only be concerned that they are repairing more than might be necessary.

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