BYD postpones start in Brazil: labor dispute and construction problems!

BYD postpones start in Brazil: labor dispute and construction problems!

BYD, the Chinese electric vehicle manufacturer, has postponed the start of production at its new factory in Brazil to the end of 2026. This decision, confirmed by Labor Minister Augusto Vasconcelos in a video message, is the result of labor disputes as well as weather-related construction delays. A start was originally planned for early 2023. The setback also has an impact on the expected number of jobs; Instead of the initial 10,000 jobs, only 1,000 jobs are now to be created in 2025.

Despite the difficulties, BYD plans to begin vehicle assembly in Brazil this year, albeit initially from pre-assembled kits. However, with full production and a target capacity of up to 150,000 electric vehicles per year, the challenges of the first phases should not be underestimated. To ensure long-term battery production, the company is also investing in mining rights for lithium-rich areas in Brazil. The market remains of great importance for BYD: 76,713 vehicles were sold in 2024, an increase of 327.7 percent compared to the previous year.

Controversies over working conditions

The difficulties BYD is experiencing in Brazil also include serious allegations regarding working conditions on the construction site. On December 23, 2024, the Brazilian Ministry of Labor and other authorities conducted a surprise inspection that found the living and working conditions of 163 Chinese workers to be extremely poor. Brazilian authorities described the conditions as “degrading” and “slavery-like.” Visas for additional workers have been suspended until the legal claims of those already involved have been clarified.

Working conditions were alarming: workers could not leave their dormitories without permission and were forced to work long hours without weekly breaks. Overcrowded accommodation and basic deficiencies such as inadequate sanitation contributed to the deterioration of their situation. Brazilian labor authorities said the workers, who entered the country under irregular visas, were potential victims of human trafficking.

As a result of these incidents, the construction site was closed and the affected workers were temporarily accommodated in hotels, where they remained pending an agreement on their severance pay. By January 8, 2025, all workers had received their severance pay and returned to China. The BYD Auto Brasil branch acknowledged the problems with working conditions, while the contractor, Jinjiang Group, vehemently denied the allegations.

Reactions and ongoing discussions

The controversies surrounding working conditions sparked widespread discussion on social media, particularly in China. Li Yunfei, general manager of BYD Group's brand and public relations department, accused "foreign forces" of slandering Chinese brands and the country on Weibo. Some Chinese internet users reacted rather resignedly, noting that the living conditions for construction site workers in Brazil are comparable to those in China.

In this tense situation, the financial pressure on BYD was also evident: on Tuesday the share fell by 4.76 percent to 395.80 Hong Kong dollars, but remains up by more than 48 percent year-on-year. The challenges in Brazil, both in terms of production and working conditions, are putting the company under significant pressure as it continues to compete for market share in a growing sector.

Overall, it remains to be seen how BYD will overcome the challenges ahead as it seeks to secure its position in the Brazilian market while improving working conditions for its employees.