Image: Barack Obama with auto executives
Jason Reed  /  Reuters
President Barack Obama, announcing plans to double vehicle mileage by 2025, was joined by major auto executives including, from left, John Mendel of American Honda, Doug Speck of Volvo North America, Alan Mulally of Ford and Dan Akerson of General Motors.
msnbc.com
updated 7/29/2011 5:48:10 PM ET 2011-07-29T21:48:10

President Barack Obama, with the backing of major carmakers, announced a plan Friday to boost average fuel economy of new cars and trucks to 54.5 miles per gallon by 2025, nearly double current levels.

"This agreement on fuel standards represents the single most important step we’ve ever taken as a nation to reduce our dependence on foreign oil," Obama said at a Washington event with top automaker executives and union leaders.

The new standards are the result of a compromise with the industry after the White House initially proposed even tougher requirements that would have raised the Corporate Average Fuel Economy, or CAFE, standard to 62 mpg.

The plan announced Friday calls for a fleetwide average of 54.5 mpg -- higher for cars and lower for "light trucks," a category that includes pickups and sport utilitiy vehicles.

The fleet standard was stuck at 27.5 for two decades until it was raised under the Obama administration, which set an increase from 30.2 this year to 35.5 mpg in the 2016 model year. The new rules would require an additional 5 percent annual improvement in car fuel economy from 2017 to 2025. For light trucks the standard would rise 3.5 percent a year from 2017 to 2021 and 5 percent annually from 2021 to 2025.

The White House said the new rules have won the backing of automakers representing 90 percent of vehicles sold in the United States.

The compromise was a bit of a surprise and looked unlikely even a few days ago, according the TheDetroitBureau.com. According to David Strickland, head of the National Highway Traffic Safety Administration, key parties didn’t sign off on the final language until nearly midnight Thursday.

Some automakers and analysts have warned that technology required by the new standards will add thousands of dollars to the cost of a typical new car. But the White House says that will be offset by savings at the pump, which it said would average $8,000 over the life of a  vehicle by 2025.

The White House figures are based on gas prices rising a modest 13 percent from 2015 to 2025 and vehicles being driven an average 15,000 a year.

"We share the administration’s goal of achieving major advances in clean, fuel-efficient vehicles,” said Jim Lentz of Toyota. "Obviously, there is still a great deal of uncertainty as to how the market will respond and what vehicle technologies consumers will embrace, which is why we are rolling out and testing a range of alternative fuel options."

One environmental group welcomed the new standards but said they could have been even stronger.

The group, The American Council for an Energy-Efficient Economy, also pointed out that actual mileage achieved by cars and light trucks in the 2020s will be much lower than the published CAFE standards, which are based on laboratory tests rather than real road performance.

"This is a major step in reducing our oil dependence and consumers' vulnerability to high gasoline costs," said Therese Langer, transportation program director for the ACEEE. "By 2030, this round of standards could save more oil than we currently import from Saudi Arabia and Iraq, combined."

But she added that the announced standards "could be eroded" in the rulemaking process before they are finalized. A notice of proposed rulemaking will be published by the end of September, opening up a public comment period, federal officials said.

"The next several months will be crucial to ensuring that the benefits this program promises are realized," Langer said.

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