SAO PAULO (Reuters) -China's BYD is poised to start assembling electric vehicles at a new factory in Brazil as early as this month, a top executive said, reducing imports as tariffs start to rise in its largest foreign market.

Alexandre Baldy, senior vice president for BYD in Brazil, said the goal is to assemble 50,000 cars this year at the plant in Bahia state from imported kits, adding that he is negotiating a lower tax rate on those vehicles.

"We should inaugurate in the coming days," Baldy said in an interview late on Friday, without specifying a date, as final regulatory approvals are still pending. "We've already completed this year's imports, taking advantage of the period before the import tax increase that took effect on July 1." 

BYD had sent a surge of finished cars into Brazil this year to take advantage of temporarily lower tariffs, shipping some 22,000 from China in the first five months, according to Reuters calculations.

That stirred complaints in Brazil's auto industry that BYD was privileging Chinese manufacturing over production from Bahia, where a labor probe and heavy rains have disrupted plans. A state labor secretary said in May that the plant would only be "fully functional" at the end of 2026.

However, Baldy said it would begin full production in July 2026, after assembling vehicles from "complete knock down" (CKD) kits for the next 12 months.

Once fully operational, he said, the complex in Camacari is likely to generate up to 20,000 direct and indirect jobs.

Expectations for the operation, on the site of a former Ford plant taken over in 2023, suffered in December when labor inspectors leveled accusations of labor abuses involving Chinese contractors hired to build the complex.

   Brazilian prosecutors filed a lawsuit in May holding BYD responsible for human trafficking and submitting workers to "slavery-like conditions," after talks on a settlement fell through.

"BYD has always sought to respect Brazilian law and human dignity in all operations," Baldy said, adding that the company wanted to reach a resolution. He did not say why efforts to negotiate a settlement had fallen through.