Will a New Electric Car Bill in California Help or Harm the Economy?

A new regulatory proposal in California would require companies to sell significantly more electric-powered cars per year.  If passed, the law would necessitate that 14 percent of new cars sold have zero emissions by 2025. The law would apply exclusively to companies that sell more than 20,000 in the state each year.

The most adamant critics of the bill have been Toyota (NYSE:TM) and Honda (NYSE:HMC), along with the Association of Global Automakers. Their primary critiques of the proposal have been that it overestimates the consumer demand for electric cars and disregards the lack of infrastructure available to recharge large numbers of emission-free vehicles (NYSE:XLE). The mandate would require 230,000 electric cars to be sold per year in California by 2025.

Environmentally minded supporters of the law have maintained that it would set a powerful precedent in the struggle against harmful emissions. The burden would fall on the automakers to spark the demand for electric cars and promote the development of recharging infrastructure. Would this spark economic activity in the US, or cause a problem in an already slumping car sector? Let us know what you think.

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