BYD denies claims it violated Hungarian environmental laws at its Szeged EV factory
The TL;DR
BYD denies environmental violations at its Szeged factory as Hungarian police investigate allegations of toxic soil and the company evaluates a second European plant.
BYD’s senior vice president, Stella Li, said the Chinese company followed all environmental regulations at its Szeged factory in Hungary, pushing back on allegations that the company breached its obligations during construction. Li made the announcement at a press conference in Belgrade on Friday, where he met with Serbian President Aleksandar Vucic to discuss a second European manufacturing facility.
The denial comes after Hungary’s environment minister said in May that BYD “severely violated” its environmental obligations in the Szeged area, where Hungarian police are investigating whether toxic soil was not handled properly during construction.” The government fined the company 10 million Forints, about $27,000, for the incident.
BYD started trial production at the Szeged plant in early 2026 and plans to start full assembly operations in the fourth quarter. The plant is the Chinese automaker’s first major production facility in Europe, a milestone that has drawn investment interest and political scrutiny. Hungary positioned itself as China’s gateway to the EU under former Prime Minister Viktor Orban, capturing 44% of all Chinese direct investment in Europe by 2023.
The political landscape has changed. Peter Magyar, who replaced Orban earlier this year, has taken a hard line on environmental and labor standards in Chinese-backed projects. The review of BYD’s Szeged site is part of a wider review that has also targeted battery manufacturers CATL and Samsung SDI, both of which operate or are building large facilities in Hungary.
TNW City Coworking Space – Where your best work happens
A workplace designed for growth, collaboration, and endless networking opportunities at the heart of technology.
However, subsequent tests have complicated the initial suspicions. According to Hungary Today, a subsequent soil test on the surrounding farms did not find pollution exceeding regulatory limits. The difference is important: the police investigation focuses on whether the soil from the construction site itself is not properly disposed of, not whether the factory is polluting the surrounding land.
Li’s appearance in Belgrade served two purposes. Besides addressing the environmental controversy, he was there to discuss BYD’s search for a second European plant. Bloomberg reported that BYD is open to buying an existing facility, partnering with another manufacturer, or building from scratch.
Vucic offered Serbia as a manufacturing hub during the meeting, citing the country’s low labor costs and proximity to EU markets.
The search for a second plant has also included discussions with Stellantis, according to Bloomberg. The Franco-Italian automaker has excess factory capacity across Europe, and the deal will provide BYD with a faster manufacturing infrastructure without a multi-year greenfield construction timeline. European EV demand is set to increase by 2026, with battery electric registrations jumping by 51 percent in March alone, making it urgent for Chinese manufacturers to localize production and avoid EU tariffs.
The Szeged conflict sits within a broader pattern of scrutiny. China Labor Watch and other organizations have raised various allegations of forced labor practices at the construction site, claims BYD has denied. The European Parliament has also raised the alarm over labor conditions at China-backed projects in Hungary, adding another dimension to political pressure on the Magyar government to show stronger oversight.
For BYD, the stakes extend beyond the $27,000 fine. The company surpassed Tesla as the world’s biggest seller of battery-electric vehicles by 2025 and is racing with other Chinese automakers to set up production in Europe before the tariff walls go up. Any further regulatory conflict in Hungary could complicate its expansion plans at a time when the European market is its fastest growing opportunity.
Li told reporters in Belgrade that BYD will continue to invest in Hungary and fully cooperate with the investigation. Whether that cooperation satisfies the Magyar government, which has political motives to distance itself from Orban’s approach to stop Chinese investment, remains an open question.
