We study generation of non-local correlations by atomic interactions in a pair of bi-modal Bose-Einstein Condensates in state-dependent potentials including spatial dynamics. The wave-functions of the four components are described by combining a Fock state expansion with a time-dependent Hartree-Fock Ansatz, so that both the spatial dynamics and the local and non-local quantum correlations are accounted for. We find that despite the spatial dynamics, our protocole generates enough non-local entanglement to perform an EPR steering experiment with two spatially separated con-densates of a few thousands of atoms.