San Francisco Sued For $121 Million By GM Over Seven Years Of Back Taxes, Interest

General Motors sued the City of San Francisco this week, looking to recover $108 million in back taxes accrued over the past seven years, as well as $13 million in penalties and interest charged against the company.

Throughout 2023, GM has been in increasingly dire straits in San Francisco. The year started off well, with GM’s self-driving car wing Cruise stepping up efforts in the city. In August, California Public Utilities Commission (CPUC) even voted to expand driverless taxi services in San Francisco despite heavy opposition from both residents, unions, and some lawmakers. However, things quickly went downhill.

After a number of high profile incidents involving self-driving cars, including some resulting in injuries and major backups, Cruise slashed the number of self-driving vehicles in the city by half. Despite this, accidents persisted, with many involving passengers and pedestrians. As a result, in late October, the California DMV ordered the company to stop all driverless car operations in the state. The very next day, Cruise announced that they would be suspending operations nationwide because of safety concerns.

Things only grew worse in the last few months, with CPUC announcing in November that they were bringing GM to court over allegedly covering up a previous crash involving a Cruise vehicle and Cruise announcing earlier this month that they would be laying off over 900 people, or about 24% of their workforce, due in large part to the problems they have been having in San Francisco.

Despite this, GM has said that San Francisco has charged the company higher taxes than normal since 2016. With Cruise operating in the city, San Francisco has been charging taxes based on GMs total revenue rather than on only Cruise. For comparison, San Francisco charged taxes based on GMs billions in global sales in 2022 alone, rather than on the $677,000 sold that year only through Cruise. As a result, GM filed a lawsuit against the City of San Francisco last Friday, with the details only being released this week due to the Christmas holiday.

In their lawsuit, filed at the San Francisco County Superior Court, GM said that they want $108 million in back taxes from between 2016 and 2022, as well as $13 million in penalties and interest. Specifically, they noted that it unfairly applied the taxes to GM rather than just Cruise, and didn’t fairly reflect the actual amount of activity in the city during that time. In addition, they noted that there were no employees, manufacturing plants, or other locations like dealerships in the city when it came to Cruise.

“The California Government Code mandates that the city taxes must fairly reflect the proportion of activity actually carried on within the city, and they do not, either generally or as applied to GM,” said the company.

A $121 million lawsuit

San Francisco gave only a brief statement to the case on Thursday, with San Francisco City Attorney deputy press secretary Alex Shorter-Barrett saying that “We are reviewing the complaint and will respond in court.”

Should San Francisco lose the case, the $121 million would significantly add to the $800 million deficit already being projected by the city over the next few years. 10% cuts wanted by Mayor London Breed would perhaps have to be even more should GM succeed.

“GM and Cruise have been pommeled again and again this year in San Francisco,” added Charles Berg, a former auto industry advisor, to the Globe. “They started off as an industry leader in self-driving cars, but know they are just knackered. The latter half of this year put them not only in the back seat, but in a terrible position for the coming year. Cruise was their big shot of getting a foothold in the driverless car market. It is far from that now.”

“This suit isn’t revenge or anything like that, but it has to be cathartic on some level. San Francisco, and California for that matter, really hurt them this year. GM just so happened to find something where San Francisco wronged them. And considering the $121 million price tag at a time where San Francisco is facing a severe financial crunch, San Francisco, this isn’t peanuts. San Francisco went after GM and started a spiral that led to Cruise facing dire consequences, now GM just did the same to them.”

“There are a lot of higher ups in San Francisco internally panicking now over this. They cannot afford another $121 million in payouts.”

“I know someone who used to work at Cruise who I talked to earlier. They didn’t really say it was revenge either, but they did say that the suit proved that “There may be justice in the world yet”. Kinda shows you their feelings on it all.”

More on the case is expected in early 2024.