March 4, 2021

Obama Reveals Details of Gas Mileage Rules

Instead, the average new vehicle in 2025 will probably be closer to 43 miles per gallon, based on the typical 20-percent discount applied by federal officials when rating a car or truck in real-world driving conditions.

That’s one example of how new corporate average fuel economy rules, known as CAFE, will require considerable interpretation for the industry and consumers alike.

Administration officials said Friday that the new fuel rules also contained an intricate set of “credits” for auto companies to achieve the new target of 54.5 miles per gallon for their fleets in 14 years.

The system of credits has been devised to encourage new technology and better penetration of current fuel-saving equipment into the market.

Sales of vehicles that run on electric batteries or fuel cells, for example, will be given more weight in the fleet average than normal gas-powered vehicles, even those with particularly efficient engines.

And to give automakers incentives to reduce gas consumption by their biggest vehicles, the new program will give credits for pickup trucks outfitted with gas-electric hybrid technology.

“The incentive program is designed to encourage more supply and use of transformative technology,” an administration official said Friday.

The president’s announcement capped weeks of intensive negotiations between federal officials, carmakers, environmental groups and California regulators, who agreed to follow the new federal guidelines rather than impose their own, more stringent clean-air standards on new vehicles.

The new rules would extend and broaden the existing CAFE rules, which require new cars and trucks to achieve an average of 34 miles per gallon by 2016. Currently, vehicle fleets average 27 miles per gallon.

Under the new program, automakers need to increase the efficiency of cars by 5 percent annually from 2017 to 2025. Light trucks will have to become 3.5 percent more efficient for the first four years of the program, and then 5 percent annually for the remainder of the cycle.

Automakers received a crucial concession that allows for a midterm review of the standards in 2021.

Industry executives generally praised the length of the program because it allowed the companies to begin planning now for the costs of developing cars and trucks down the road.

“Fourteen years is really important to us,” said Sue Cischke, the chief environmental and safety officer at Ford Motor Company. “Knowing what’s going to happen long term allows us to invest in technology.”

The president acknowledged that reaching the 54.5 standard would require improvements in existing engines and hybrid systems, as well as breakthroughs in other areas, like batteries and advanced alternative-fuel technology.

“There’s no silver bullet here,” the president said at his appearance at the Washington Convention Center, flanked by several fuel-efficient vehicles. “But there are steps we can take now that will help us become more energy independent.”

The Obama administration estimated that the overall program would save consumers $1.7 trillion in fuel costs by the year 2025 and reduce oil consumption by 2.2 million barrels a day. But officials were not yet able to say how much more the cleaner car of the future would cost.

Calculations released by federal officials early in the negotiations estimated that a 56.2 mile-per-gallon standard would add up to $2,500 to the cost of a typical car.

Administration officials said the extra cost has yet to be calculated for the 54.5 miles-per-gallon target. Those numbers will be included in the formal proposal for new CAFE rules due to be filed by September.

Some industry research firms said consumers would expect any rise in the price of a car to be offset by savings at the pump.

“We have a hard time believing that the typical new-car customer will be happy about spending $2,000 more for his or her new car than they otherwise would for fuel economy benefits that may or may not be in their favor,” said Jack R. Nerad, executive director of the car-buying guide Kelley Blue Book.

Matthew L. Wald contributed reporting from Washington.

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