The growing controversy in the automaker's biggest overseas market has put a spotlight on immigrant worker conditions in the northeastern Brazilian state of Bahia. A deal with labor prosecutors involving BYD and the Jinjiang Group could be inked as soon as Jan.

A spokesperson for Chinese automaker BYD has objected to reports about poor conditions at a construction site in Brazil where it is building a factory, saying the allegations were aimed at “smearing” China and Chinese brands.

BYD has been building the factory with an annual capacity of producing 150,000 cars initially in Brazil, the Chinese EV giant's largest overseas market, as part of plans to start production there.