General Motors is trying to revive an incendiary lawsuit against Fiat Chrysler Automobiles with explosive new allegations including bribes paid from secret offshore bank accounts and a union official acting as a double agent between the two automotive giants.

Why it matters: The extraordinary legal battle is occurring amid earth-shaking changes in the global auto industry that threaten to turn both litigants into dinosaurs if they aren't nimble enough to pivot to a future where transportation is a service, cars run on electrons and a robot handles the driving.

GM contends former FCA CEO Sergio Marchionne, who died in 2018, orchestrated a multimillion-dollar racketeering conspiracy — including bribes — that corrupted labor negotiations with the United Auto Workers for more than a decade.

• The reason: An attempt to financially weaken GM and force it into a global merger it had twice rejected, in 2008 and again in 2015.

Driving the news: GM this week asked a federal judge to reinstate its unprecedented lawsuit against FCA, citing new information about the tactics it says FCA used in order to gain a substantial labor cost advantage over GM.

• Just last month, U.S. District Judge Paul Borman threw out GM's lawsuit, which had shocked the tight-knit industry when it was filed in November 2019.
• Now GM says the alleged scheme “is much broader and deeper than previously suspected or revealed" and the judge should reconsider his dismissal.

GM's stunning new allegations include a claim that a top UAW official serving on GM's board of directors as a representative of the union's retiree health benefits trust was actually a "mole" who was being paid by FCA to feed them information about GM's business strategy.

• GM also claims its investigators discovered evidence of offshore bank accounts in Switzerland, the Cayman Islands and other countries that were linked to senior UAW officials and Fiat Chrysler's former head of labor relations.
• Of note: GM's lawsuit runs parallel to an ongoing corruption probe by the U.S. Justice Department that has already resulted in guilty pleas and jail terms for at least 10 former UAW and FCA officials.

What they're saying: FCA officials privately say they believe GM's legal bombshell was intended to disrupt FCA's pending merger with another global automaker, France's PSA Groupe.

The big picture: For legacy automakers, the stakes have never been more dire.

• Desperate carmakers are scrambling for every advantage as they confront changing consumer habits, disruptive advances by new competitors and the crushing burden of future technology investments.

Between the lines: Traditionally, U.S. automakers and the UAW have adhered to so-called pattern bargaining, which means wages and benefits negotiated by one carmaker are typically matched by the others.

• Since the 2009 bankruptcies of GM and Chrysler, however, labor terms have diverged among Detroit automakers (including Ford) to the point that GM's total labor costs are about $8 per hour more than FCA's, potentially worth billions of dollars.
• A detailed analysis by labor consultant Colin Lightbody (notably, FCA's former labor economist) attributed the cost gap to strategic decision-making by both companies.
• GM's lawsuit contends it was because Marchionne had his foot on the scale.

The intrigue: Marchionne had been a thorn in GM's side for more than 15 years.

• In 2005, as head of ailing Fiat SpA, he extracted a $2 billion payment from GM to settle a contract dispute between the one-time partners and then used it to fund the Italian carmaker's comeback. GM, meanwhile, went bankrupt in 2009 and required a taxpayer bailout.
• By 2009, Marchionne had positioned Fiat as Chrysler's White Knight, taking control of the smallest U.S. carmaker using American taxpayers' money and later merging it into Fiat to create a global powerhouse.
• But in a rapidly changing industry, Marchionne felt it wasn't enough, so in 2015, he proposed a merger to GM CEO Mary Barra, who rejected the overture.
• A month later, Marchionne made his famous "Confessions of a Capital Junkie" presentation to analysts, an impassioned plea for industry consolidation, citing a wasteful duplication of capital and resources among automakers.

Where it stands: FCA has until Aug. 10 to respond to GM's latest charges, after which Judge Borman will decide whether to allow the case to proceed. If not, GM could appeal to the 6th Circuit Court of Appeals.

My thought bubble: Exploiting rivals' weaknesses to gain advantage is nothing new in the auto industry. But whether GM's lawsuit is a paranoid fantasy or the manifestation of a simmering grudge between two long-term rivals, the stakes couldn't be higher in an industry being turned upside-down.