Fresh allegations of forced labour at BYD’s factory project in Hungary are threatening to complicate the Chinese electric-vehicle giant’s expansion in Europe at the same time as Canada opens its market wider to Chinese-made EVs under a new tariff regime.
The allegations, drawn from an upcoming report by New York-based labour rights researchers and amplified by rights groups tracking corporate conduct, centre on the construction of BYD’s plant in Szeged, southern Hungary. The claims describe Chinese migrant workers facing excessive hours, continuous seven-day work schedules, withheld wages, pressure tied to visa and travel costs, and dormitory-style living conditions that researchers say amount to indicators of forced labour. BYD’s Szeged facility was announced in late 2023 as a major manufacturing base expected to create thousands of jobs and deepen the company’s foothold in Europe.
The timing is awkward for both the company and governments that have treated Chinese EV investment as an industrial opportunity. Canada, after months of diplomatic engagement with Beijing, agreed in January to lower its tariff on Chinese electric vehicles to 6.1% from the 100% duty imposed in 2024, initially allowing up to 49,000 units under a quota that is due to expand over time. Ottawa presented the move as part of a broader trade reset, arguing that access to Chinese supply chains and lower-cost vehicles could support domestic EV adoption, even as critics warned it could weaken local manufacturing.
That commercial opening now collides with growing scrutiny over labour practices in Chinese EV supply chains. The allegations linked to the Hungary project do not concern the sale of vehicles in Canada, but they add to wider questions about oversight, contractor accountability and the social cost of rapid global expansion. They also arrive just days after Brazil formally placed BYD on a government registry of employers accused of subjecting workers to conditions analogous to slavery, following a 2024 scandal involving 163 Chinese workers at the construction site of BYD’s plant in Bahia. Brazilian officials said workers were subjected to abusive contracts, passport surrender and degrading housing conditions, while BYD said earlier it had not known of violations until the issue surfaced publicly.
For BYD, the labour accusations land at a delicate point in its international strategy. The company dethroned Tesla as the world’s top electric-vehicle maker on an annual basis in 2025 and has told analysts it is highly confident overseas sales could reach 1.5 million units in 2026. Overseas deliveries have become a bright spot as intense competition and softer demand at home have squeezed margins and pushed annual profit lower for the first time in four years. Europe has been central to that plan, not only as a sales market but as a production base that could help BYD blunt trade barriers and reassure policymakers wary of dependence on Chinese imports.
Hungary has been especially eager to attract battery and EV investment, presenting itself as a manufacturing bridge between China and the European Union. But that strategy has already drawn questions in Brussels. Last year, Reuters reported that the EU was examining whether China had provided unfair subsidies to BYD’s Hungary plant. Now labour concerns add a second line of pressure, one that could prove more politically combustible because it touches on human rights as well as industrial policy.
Europe’s regulatory direction is also becoming less forgiving. The EU’s Forced Labour Regulation entered into force in December 2024 and will begin applying on 14 December 2027, banning products made with forced labour from being sold on the bloc’s market regardless of origin. National authorities are to handle cases within the EU, while the European Commission leads where forced labour occurs outside the bloc. The law gives regulators a formal pathway to investigate, demand information and block products if concerns are substantiated. That means allegations around a European factory site, even before any formal finding, can carry consequences far beyond reputational damage.
Canada’s policy shift therefore looks more exposed than it did in January. Prime Minister Mark Carney framed the tariff cut as a pragmatic economic decision at a time of strain in relations with Washington and as a route to cheaper EVs and stronger trade ties with China. Yet North American criticism was immediate, and the emergence of fresh labour allegations around one of China’s most prominent carmakers is likely to sharpen calls for stronger due diligence on imports, sourcing and corporate conduct.
No formal public finding has yet established forced labour at the Szeged site, and the allegations remain allegations. Even so, the pattern now confronting BYD is becoming harder for investors, trading partners and regulators to ignore. A company that has become a symbol of China’s clean-technology rise is finding that scale and speed abroad bring a second test: whether it can convince foreign markets that the race to dominate electric mobility is not being built on labour practices those same markets are moving to punish.
The allegations, drawn from an upcoming report by New York-based labour rights researchers and amplified by rights groups tracking corporate conduct, centre on the construction of BYD’s plant in Szeged, southern Hungary. The claims describe Chinese migrant workers facing excessive hours, continuous seven-day work schedules, withheld wages, pressure tied to visa and travel costs, and dormitory-style living conditions that researchers say amount to indicators of forced labour. BYD’s Szeged facility was announced in late 2023 as a major manufacturing base expected to create thousands of jobs and deepen the company’s foothold in Europe.
The timing is awkward for both the company and governments that have treated Chinese EV investment as an industrial opportunity. Canada, after months of diplomatic engagement with Beijing, agreed in January to lower its tariff on Chinese electric vehicles to 6.1% from the 100% duty imposed in 2024, initially allowing up to 49,000 units under a quota that is due to expand over time. Ottawa presented the move as part of a broader trade reset, arguing that access to Chinese supply chains and lower-cost vehicles could support domestic EV adoption, even as critics warned it could weaken local manufacturing.
That commercial opening now collides with growing scrutiny over labour practices in Chinese EV supply chains. The allegations linked to the Hungary project do not concern the sale of vehicles in Canada, but they add to wider questions about oversight, contractor accountability and the social cost of rapid global expansion. They also arrive just days after Brazil formally placed BYD on a government registry of employers accused of subjecting workers to conditions analogous to slavery, following a 2024 scandal involving 163 Chinese workers at the construction site of BYD’s plant in Bahia. Brazilian officials said workers were subjected to abusive contracts, passport surrender and degrading housing conditions, while BYD said earlier it had not known of violations until the issue surfaced publicly.
For BYD, the labour accusations land at a delicate point in its international strategy. The company dethroned Tesla as the world’s top electric-vehicle maker on an annual basis in 2025 and has told analysts it is highly confident overseas sales could reach 1.5 million units in 2026. Overseas deliveries have become a bright spot as intense competition and softer demand at home have squeezed margins and pushed annual profit lower for the first time in four years. Europe has been central to that plan, not only as a sales market but as a production base that could help BYD blunt trade barriers and reassure policymakers wary of dependence on Chinese imports.
Hungary has been especially eager to attract battery and EV investment, presenting itself as a manufacturing bridge between China and the European Union. But that strategy has already drawn questions in Brussels. Last year, Reuters reported that the EU was examining whether China had provided unfair subsidies to BYD’s Hungary plant. Now labour concerns add a second line of pressure, one that could prove more politically combustible because it touches on human rights as well as industrial policy.
Europe’s regulatory direction is also becoming less forgiving. The EU’s Forced Labour Regulation entered into force in December 2024 and will begin applying on 14 December 2027, banning products made with forced labour from being sold on the bloc’s market regardless of origin. National authorities are to handle cases within the EU, while the European Commission leads where forced labour occurs outside the bloc. The law gives regulators a formal pathway to investigate, demand information and block products if concerns are substantiated. That means allegations around a European factory site, even before any formal finding, can carry consequences far beyond reputational damage.
Canada’s policy shift therefore looks more exposed than it did in January. Prime Minister Mark Carney framed the tariff cut as a pragmatic economic decision at a time of strain in relations with Washington and as a route to cheaper EVs and stronger trade ties with China. Yet North American criticism was immediate, and the emergence of fresh labour allegations around one of China’s most prominent carmakers is likely to sharpen calls for stronger due diligence on imports, sourcing and corporate conduct.
No formal public finding has yet established forced labour at the Szeged site, and the allegations remain allegations. Even so, the pattern now confronting BYD is becoming harder for investors, trading partners and regulators to ignore. A company that has become a symbol of China’s clean-technology rise is finding that scale and speed abroad bring a second test: whether it can convince foreign markets that the race to dominate electric mobility is not being built on labour practices those same markets are moving to punish.
Topics
World