President Obama Announces CAFE Standard of 54.5 MPG for 2025

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The Obama administration raised the bar for future federal fuel economy standards today, nearly doubling the current passenger fleet fuel efficiency ratings by the year 2025, when the Corporate Average Fuel Economy Standardswill jump to 54.5 miles per gallon (mpg). The new standards will affect all cars and light-duty trucks, and are not only intended to improve fuel economy, but also reduce greenhouse gas emissions.

The standards issued by the U.S. Department of Transportation (DOT) and the U.S. Environmental Protection Agency (EPA) are intended to build on the success of previous standards from the 2011-2016 model years. These guidelines raised fuel efficiency standards to 35.5 mpg by 2016, and according to both agencies, are already yielding higher mpg ratings from a number of manufacturers. According to the two groups, 13 major automakers – which accounted for more than 90% of all vehicles sold in the U.S. – announced their support of the standards. The automakers included Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, and Volvo, as well as the United Auto Workers.

By aligning state and federal requirements, it provides vehicle manufacturers in the U.S. and abroad with long-term regulatory certainty, which the two groups hope will encourage investments in clean, innovative technologies, as well as in advanced technologies that increase economic competiveness in the U.S. and support high-quality domestic jobs in the auto industry.

Transportation secretary Roy LaHood called the program “groundbreaking” and believes it will result in vehicles that use less gas, travel farther, and provide better efficiency, all while better protecting the environment. He also stated that automakers are already seeing sales for their more fuel-efficient vehicles climb since the Administration’s first fuel economy efforts.

LaHood also believes that the program will equal substantial savings for American families. The combined efforts of both the previous and new CAFE standards are projected to save American families more than $1.7 trillion dollars in fuel costs. When broken down, this means an average fuel savings of more than $8,000 by 2025 over the lifetime of the vehicle. Looking ahead, the Administration estimates that families purchasing a model year 2025 vehicle, net savings will be comparable to lowering the price of gasoline by approximately $1 per gallon. The changes should also reduce American consumption of oil from 12 billion barrels day to 2 million barrels by 2025 – which is as much as half of the oil that the U.S. imports from OPEC each day.

The new standards should also translate to better air quality, as greenhouse gas emissions from cars and light trucks are estimated to be cut by 6 billion metric tons over the life of the program. This is more than the total amount of carbon dioxide emitted by the U.S. in 2010 alone.

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