SupplyChainBrain reports that Brazil is suing Chinese automaker BYD over allegations that the company subjected workers to slave-like conditions and engaged in human trafficking. According to Associated Press, Brazilian labor prosecutors filed suit on May 27 against BYD and two contractors, seeking 257 million Brazilian reais ($50 million USD) in damages. The lawsuit stems from the rescue of 220 Chinese workers from a construction site at a BYD factory in Brazil in December 2024, who prosecutors allege were brought into the country under false pretenses and forced to work under "extremely degrading" conditions. According to prosecutors, workers at five residential facilities managed by BYD and the two contractors slept in beds without mattresses, had limited access to toilets, and worked "exhausting hours" without weekly rest. Federal agents also allege that workers had up to 70 percent of their wages withheld, were forced to pay deposits to their employers, and had their passports confiscated. If a worker terminates their contract early, they forfeit their deposit and must repay the value of the airline ticket they received to come to the country.
From a supply chain perspective, BYD Auto Co. Ltd. (Build Your Dreams), headquartered in Shenzhen, China, with Wang Chuanfu as Founder & Chairman, recorded global vehicle sales of 4.27 million units in 2024 (surpassing Tesla to become the world's largest EV manufacturer), 2024 revenue of $107 billion USD, and main models including BYD Han, Tang, Song, Yuan, Atto 3, Seal, and Dolphin. BYD Brazil acquired the former Ford facility in Camaçari, Bahia for $600 million USD, planned as BYD's first major production base in Latin America in 2024. The facility is intended to produce SUVs, plug-in hybrids, and battery electric vehicles in Brazil. The Lula administration (Luiz Inácio Lula da Silva, President) is promoting Brazil automotive investments through the Rota 2030 and Mover programs. Geraldo Alckmin (Vice President, Ministry of Development) and Jinwoo Stella Li (BYD EVP) are among the key executives overseeing the partnership.
From a supply chain perspective, the Brazil Ministry of Labor (Ministério do Trabalho e Emprego; MTE; Luiz Marinho, Minister), Public Ministry of Labor (Ministério Público do Trabalho; MPT), Federal Public Defender, and Federal Highway Police are the main investigating agencies. Brazil's Lista Suja (Dirty List) publicly lists companies that employ workers in slave-like conditions, with significant consequences for financing, procurement, and public relations. Other major BYD global production and assembly facilities are located in Hungary (Szeged), Türkiye (Manisa; $1 billion USD), Indonesia, Thailand (Rayong), Pakistan, Vietnam, and Mexico. The EU CBAM (Carbon Border Adjustment Mechanism), EU Forced Labor Regulation (approved in March 2024), Corporate Sustainability Due Diligence Directive (CSDDD), and U.S. Uyghur Forced Labor Prevention Act (UFLPA) are the main forced labor compliance frameworks.
From a supply chain perspective, other investments by EV and battery manufacturers in Latin America include (1) Tesla Mexico Gigafactory (Nuevo León; planned but delayed due to Trump tariffs), (2) Stellantis Brazil (Goiana, Pernambuco; $6 billion USD planned), (3) Volkswagen Brazil (Anchieta, São Paulo; EV transition), (4) General Motors Mexico (Ramos Arizpe; Equinox EV), (5) Great Wall Motors Brazil (Iracemápolis, São Paulo; former Mercedes-Benz facility), (6) Chery Brazil (Jacareí, São Paulo), (7) NIO, XPeng, and Li Auto, and (8) JAC Motors Brazil partnership with Caoa. BYD's planned annual production capacity of 150,000 vehicles in Brazil is intended to strengthen its EV market leadership in Latin America; however, the forced labor lawsuit poses serious risks to reputation and investor confidence. As a result, Brazil's forced labor suit against BYD appears to be prompting a fundamental reassessment of international construction supply chains and human rights due diligence globally, with contractor monitoring and social compliance emerging as critical strategic priorities for supply chain managers.
Key Points:
1. Brazil is suing BYD for 257 million BRL ($50 million USD) in damages.
2. 220 Chinese workers were rescued from slave-like conditions in December 2024.
3. Workers faced conditions including 70% wage deductions, passport confiscation, and deposit forfeitures.
4. BYD acquired the former Ford facility in Camaçari, Bahia for a $600 million USD investment.
5. The Lula administration is promoting automotive investments through the Mover program.
