General Motors Sues San Francisco

Photo Credit: Tanya Gazdik/MediaPost

General Motors was dealt a huge PR blow in October when one of its automated Cruise taxis ran over a pedestrian in San Francisco, which prompted the state to suspend licensing for Cruise.

Today, the automaker is looking for some monetary relief via an unrelated lawsuit against the city, seeking $121 million.

GM alleges that San Francisco unfairly imposed $108 million in taxes as well as $13 million in penalties and interest on the company between 2016 and 2022.

“The Detroit-based automaker argues that the assessment was wrong, given its limited presence in terms of sales and personnel within the city,” according to the San Francisco Chronicle.



The lawsuit states that its “core automotive business does not employ anyone in the city, has no plants or other physical locations in the city, has no dealerships in the city, and sells only a de minimis amount of retail goods (approximately $677,000 in 2022) in the city.”

While the suit is unrelated to the situation involving the taxis, San Francisco is unlikely to be GM’s favorite U.S. city at the moment, according to Barron’s. 

Cruise’s license to operate self-driving cars in the city was suspended in  after a hit-and-run victim ended up under a Cruise taxi and was dragged several feet before the vehicle stopped, Barron’s previously reported. Cruise has since suspended all operations nationwide amid an investigation and an independent safety review.

The automaker said San Francisco-based Cruise is operated separately from GM, generates only a minimal amount of sales and should not be used to calculate GM’s liabilities in the city where the parent company has a limited presence.

“The Cruise unit at issue is contracting after an October accident in San Francisco that caused a furor in the city and caught the attention of regulators,” per Reuters. “The incident has caused Cruise to pull its U.S. cars off roads, undergo a safety review and cut nearly a quarter of its staff nationwide.”

The timing is interesting.  The complaint was filed last week in state court in San Francisco. GM did not state why it waited until now to challenge the assessment, which it previously paid.

"Cruise's technology and autonomous vehicle rideshare with goods delivery business is fundamentally different from GM's business," which is making and selling cars, said the company in the lawsuit, according to The San Francisco Standard.

Using Cruise’s payroll to calculate GM’s liabilities resulted in a tax bill based on gross receipts that were “tens of thousands of times greater than if Cruise’s payroll were not included in GM’s payroll factor,” argued the complaint, which was first reported by Bloomberg.

“GM said in the lawsuit that under California law, taxes must ‘fairly reflect’ the proportion of business operations that go on in a city, and that it was ‘inherently distortive’ to charge the company steep tax based on Cruise's payroll when many of its employees worked remotely,” per The San Francisco Standard. “When GM first invested in Cruise in 2016, the startup had approximately 40 employees. By the end of 2022, Cruise employed more than 3,000 people in the city, about 65% of whom were engineers.”

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