General Motors, the parent company of autonomous taxi outfit Cruise, has filed suit against the City of San Francisco over a $108 million tax bill that it says was incorrectly charged. And this may be some sort of revenge for the city and state's treatment of the company.
San Francisco has charged GM business taxes over seven years, for its subsidiary Cruise LLC, that were based on a percentage of GM's $3 billion in global revenue, a bill that totaled $108 million. It's not clear if they tried to negotiate this previously behind the scenes, but GM has now gone to court over the matter, saying it should only be charged taxes based on the actual business it did in the city.
As Bloomberg first reported, the lawsuit was filed last Friday in San Francisco Superior Court.
GM wants their tax bill based on what they, via Cruise, actually sold in "retail goods" in the city, and they want $13 million in interest repaid on what they say was an unfairly charged tax bill.
"GM’s 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," the lawsuit says.
While Cruise, which is a wholly owned subsidiary of GM, is headquartered in San Francisco, GM's lawsuit now contends that it has only generated a small amount of revenue here.
Still, they must have made more than $677,000 in 2023, given the expansion of their commercial business here this year — and that figure seems to just be for 2022, and it's not clear if that was rider revenue, or what "retail sales" means.
But why is GM only now seeking this refund, weeks after it laid off nearly a quarter of its staff, when it's apparently been aware of how SF was charging it taxes for seven years? NBC Bay Area reports that GM is seeking to recover all this money from SF — maybe in some kind of parting shot? — totaling $121 million, in a year when SF is facing an $800 million budget deficit.
Cruise was doing business in San Francisco in 2022 and for much of 2023 — with the company quickly scaling up its number of autonomous taxis over the summer. Cruise took on more customers from the broader public starting in August, after the California Public Utilities Commission (PUC) made their controversial decision to allow both Cruise and Waymo to widely expand their paid taxi services across San Francisco.
Cruise would, as you likely know, go on to have a number of high-profile incidents that made the California DMV, and ultimately the PUC, doubt the safety of its vehicles. And this led to cruise suspending all driverless operations in late October, recalling all of its AVs nationwide, and laying off 900 employees just before Christmas. CEO Kyle Vogt also resigned in mid-November — just two months after saying that San Francisco aught to be "rolling out the red carpet" for Cruise's AVs instead of being so persnickety about safety issues.
So now, ahead of paying the bill for 2023, they are seeking a refund and a recalculation of how Cruise is being charged.
Neither GM nor the SF City Attorney's Office have publicly commented on the suit as of yet.
Meanwhile, it's unclear when or if we'll see Cruise's robotaxis on SF's streets again. There was talk about scaling up in Los Angeles when the company announced its layoffs earlier this month — but it has obviously spent a lot of money teaching its cars how to navigate SF's complicated city streets, so... they'll likely be back?
Maybe not unless SF cuts them a break on the taxes.