BYD Under Fire: Environmental and Labor Allegations at Its First EU EV Plant

BYD, the world's largest electric vehicle (EV) maker, is facing a double crisis at its first wholly owned European factory in Szeged, Hungary. The company is under criminal investigation for alleged environmental violations, while its construction partners have been sanctioned for severe labor abuses. These controversies are casting a shadow over BYD's aggressive European expansion plans and delaying its production timeline.

Environmental Violations Investigation

Hungarian police are officially investigating BYD over suspected breaches of environmental rules during the construction of its plant in Szeged . The probe centers on the movement of toxic soil from the construction site to outside locations .

On May 12, 2026, the Csongrád-Csanád County Government Office filed a criminal complaint against BYD Auto Hungary Kft. for failing to comply with the conditions of its environmental permit . Local media reports indicate that nearly 31,000 cubic meters of untested topsoil contaminated with alkylbenzenes above permitted limits was transported to ten properties near Szeged . As a result, authorities ordered the destruction of crops grown on that land . A separate environmental fine was reportedly issued by the authorities as early as mid-2025 . Hungary's Rural Development Minister, Dr. Viktória Lőrincz, described the findings as "serious irregularities" and launched a strict examination of the case .

Stella Li's Response

BYD Executive Vice President Stella Li has forcefully rejected the environmental allegations. Speaking at an international conference in Belgrade, she stated: "This is an inaccurate assertion — we have already engaged legal counsel to address it, as we have acted appropriately" . Li insisted that BYD has complied with all environmental regulations at the Szeged factory and is cooperating fully with Hungarian authorities .

Labor Allegations and Fines

The environmental probe is not the only challenge facing BYD in Hungary. The factory has faced serious and well-documented labor-related controversies.

• China Labor Watch investigation (March 2026): The New York-based NGO interviewed 50 Chinese migrant workers at the Szeged construction site. Their report documented 7-day workweeks, 14-hour shifts, passport confiscation, debt bondage, and multiple indicators of forced labor . These findings were raised in the European Parliament — the first time a Chinese company has been addressed there on labor abuse allegations .

• Official government response: Hungarian authorities confirmed labor law violations involving three companies participating in the BYD factory construction. As of June 9, 2026, 18 labor inspections and 9 occupational safety investigations had been initiated, and enforcement actions were taken against AIM Construction Hungary Kft., Plusz Kéz Kft., and LÉVAI-SECURITY Kft. .

• Brazil parallel: This is not an isolated incident. In January 2026, BYD settled a separate forced labor case in Brazil, agreeing to pay approximately 40 million Brazilian reais (about $8 million) .

Broader European Production Plans

Despite these headwinds, BYD is pushing forward with its European production ambitions. The controversies, however, have contributed to significant delays in its timeline.

• Timeline for vehicle assembly: Trial production finally began in Szeged in February 2026 . Full vehicle assembly is now confirmed to start in Q4 2026 . This is roughly a year behind the original late-2025 schedule . Initial output will run below full capacity for the first two years .

• Investment size: The Szeged facility is a multi-billion-euro project, with reports suggesting investments of over €3 billion for the own facility and an additional €700 million for an R&D center in Budapest .

• Search for a second production site: Stella Li told Reuters in June 2026 that BYD is looking to take over an existing factory in southern Europe for its second assembly plant, with Spain on the shortlist . As a result, BYD has put its planned $1 billion plant in Türkiye on hold to prioritize ramping up production at the Hungary site . The company also plans to establish battery production in Europe to support its growing vehicle output in the region .