Brazilian authorities said on Monday that they have halted the construction of the plant that Chinese EV giant BYD Co Ltd. (OTC:BYDDY) is building in Salvador, Bahia after finding workers living and working in conditions analogous to “slavery.”

What Happened: Authorities ordered that the construction of the factory in Bahia be stopped after rescuing 163 people working at the site, according to a statement by the Labor Prosecutor’s Office (MPT).

The authorities shut down the workers’ lodgings and communicated the same to both BYD and construction firm Jinjiang Construction Brazil Ltd, one of the contractors hired by the company to carry out the construction, it added.

MPT’s statement said that the workers lived in conditions analogous to slavery across four main lodgings. In one of the lodgings, the workers slept on beds without mattresses and 31 workers shared one bathroom, it said.

At the construction site, there were only eight badly maintained chemical toilets for about 600 workers, it said, while also noting multiple accidents at the site. In one case, a worker suffered an accident after not having a break for 25 days.

The MPT also noted that the conditions constituted “forced labor.” If a worker were to terminate their employment contract after six months, they would leave the country without any pay for their work since the company deducted their airfare to and from Brazil, in addition to other costs, the statement said.

BYD did not immediately respond to Benzinga’s request for comment.

Why It Matters: BYD is China’s largest EV maker and makes plug-in hybrids and battery electric vehicles which are sold in China, Europe, and also Brazil. In November alone, the company made 540,588 new energy vehicles as compared to 316,510 in the corresponding month of 2023.

BYD took over Tesla as the world's largest BEV seller in the fourth quarter of 2023. However, Tesla took back the crown in the first quarter of 2024 and has been holding on to it since.

For the third quarter between July and September, BYD reported operating revenue of 201.12 billion yuan ($28.25 billion) and net profit of 11.6 billion yuan.

The company’s new factory in Bahia was expected to be operational by next year.

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