The company that sells more electric vehicles than anyone on Earth now appears on a government registry alongside employers who subjected workers to slavery.

Brazil’s Ministry of Labour added BYD to its Cadastro de Empregadores — the “dirty list” — formalising findings that workers building BYD’s flagship Brazilian factory were held in conditions the government classifies as analogous to slavery. The list carries reputational damage, but the real penalty is financial: companies on it are barred from receiving loans from state development banks, including BNDES, whose cheap credit underpins industrial expansion across Brazil.

The Camaçari plant keeps running. It has produced more than 25,000 vehicles since its inauguration last October, when President Luiz Inácio Lula da Silva attended the ceremony in a show of strengthening Brazil-China ties. But BYD’s expansion plans — structured in phases requiring significant capital — now face a two-year financing squeeze.

What inspectors found

The case traces back to November 2024, when Brazilian labour inspectors raided the Camaçari construction site in Bahia state and found 163 Chinese workers living in what officials described as degrading conditions.

A labour contract reviewed by Reuters shows the workers — hired through contractor Jinjiang Group — had to surrender their passports, have most of their wages redirected to China, and pay a deposit of nearly $900, recoverable only after six months of work. Inspectors found 31 labourers crammed into a single house with one bathroom, food piled on the ground alongside personal belongings.

Brazilian workers at the site told auditors their Chinese counterparts normally worked seven days a week, including public holidays. Supervisors had granted rest days only because the inspection team was en route, according to the South China Morning Post.

BYD has said it had no knowledge of any violations until Brazilian media reported them in late November 2024. Jinjiang Group has denied the claims. Brazilian officials have countered that the primary employer retains ultimate responsibility for contractor compliance.

The financing trap

BYD signed an agreement with labour prosecutors over the matter — but not with labour inspectors. That distinction left the company exposed to the registry, according to Automotive World. Firms are added to the dirty list only after all administrative appeals are exhausted, and remain listed for two years barring a court-ordered removal.

The practical consequences go beyond reputational harm. BNDES, Brazil’s national development bank, is restricted from extending loans to listed companies. International banks with ESG compliance obligations face similar constraints. For BYD, which has positioned Brazil as its regional hub for vehicle production and export across Latin America, the timing could hardly be worse.

The contractor defence

BYD’s strategy throughout the affair has been to direct responsibility at Jinjiang Group, its construction contractor. The argument is straightforward: BYD hired a firm to build a factory, and any labour violations were that firm’s doing.

Brazilian authorities have rejected that framing. Labour officials argue that the company commissioning the work bears ultimate responsibility for conditions on its own site — particularly when workers are building BYD’s facility, for BYD’s benefit, under BYD’s timeline.

The case highlights a structural feature of Chinese overseas expansion. The contractor model — tight subcontracting chains, migrant labour recruited from the same province as the parent company, minimal local oversight — has accompanied Chinese firms building ports, railways, and factories across Africa, Southeast Asia, and now Latin America. When conditions deteriorate, the parent company points to the contractor. Governments are increasingly unsatisfied with that answer.

The Mexico hedge

BYD appears to have been hedging its bets. The automaker is pursuing the acquisition of a former Nissan-Mercedes-Benz facility in Aguascalientes, Mexico — a plant with annual capacity of roughly 230,000 vehicles that Nissan is expected to vacate in May, according to Automotive World. A successful bid would give BYD production hubs in both of Latin America’s largest automotive manufacturing corridors.

The parallel track suggests BYD anticipated regulatory friction in Brazil. The dirty list listing confirms that friction is real, and that aggressive expansion and labour compliance are not automatically compatible pursuits.

BYD did not respond to a request for comment.

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