BYD to begin EV assembly in Brazil as tariffs rise and labor scrutiny mounts

Chinese EV giant BYD Co. Ltd. is expected to begin local EV assembly this month with a new plant in Brazil, following a strategic shift due to increasing import duties.

In Bahia state and on the site of a decommissioned Ford factory, the new facility will help BYD cut down on imported vehicles and begin a level of supply chain localisation in its top market beyond China.

The automaker plans to locally manufacture 50,000 cars by 2025 using completely knock-down (CKD) kits, all of which will be shipped in from overseas markets.

According to estimates by Reuters, BYD has finalised this year's EV imports following the rise in customs duties, which came into force on July 1, with around 22,000 units shipped over from China in the initial five months of 2025.

This has attracted criticism from Brazil's domestic auto industry, with trade groups accusing BYD of putting China first ahead of local production.

Delayed ramp-up and regulatory hurdles

The company is currently awaiting final regulatory approvals before beginning operations.

While BYD had intended to reach full production capacity sooner, full-scale operations at the Camacari plant are currently set for July 2026.

Until then, the company will focus on constructing vehicles from imported kits for the next year.

The plant's progress has been hampered by challenges such as inclement weather and labour disruptions. In May, a labour official claimed that the plant would not be "fully functional" until the end of 2026, delaying expectations.

Once operational, the complex is expected to generate up to 20,000 direct and indirect jobs, making it a major employer in the region and a key component of BYD's long-term Latin American strategy.

Labour disputes cloud expansion

Despite its ambitious objectives, BYD is under constant investigation for labour conditions on the construction site.

In December 2024, Brazilian labour authorities accused Chinese contractors working at the company of subjecting workers to "slavery-like conditions."

In May 2025, Brazilian prosecutors intensified the situation by launching a lawsuit accusing BYD of human trafficking and holding the company accountable for harsh activities.

Efforts to achieve a court settlement failed, extending the legal ambiguity surrounding the plant's development.

BYD has responded by stating its commitment to Brazilian labour laws and human rights, but has not provided specific reasons for the failure of settlement negotiations.

Strategic importance amid geopolitical and economic pressures

The rapid growth of BYD units in Brazil follows a similar movement by local Chinese carmakers around the world to explore international markets after recent trade limits against them were imposed in recent months.

Brazil, as a large consumer market, sees the increasing demand for EVs and thus serves as a key overseas market to the company.

BYD is contesting the local assembly operation as a strategy to fight tariffs and compete fairly with both domestic and international businesses.

Moving production from imports to domestic manufacture is expected to be positively received by Brazilian regulators and consumers concerned about employment and economic sovereignty.

However, the labour issue is a reputational risk that could come back to bite it in the eyes of the public and its new regulators.

The company is trying to establish itself in South America, and whether the lawsuit ends up being a roadblock and how the company works around local compliance standards are going to be big indicators in that process.

As BYD prepares to begin assembly operations in Brazil, the company enters a critical chapter of its international expansion.

The balance of economic opportunity, local industrial development, and ethical responsibility will determine the success of this undertaking.

The company's capacity to adapt to local conditions while implementing its global EV strategy will be put to the test during the next year.