CAFE to Increase to 54.5 MPG by 2025

WASHINGTON - President Barack Obama announced an agreement with 13 automakers to increase the corporate average fuel economy (CAFE) standard to 54.5 miles per gallon for cars and light-duty trucks by model-year 2025.

The new program would increase the passenger car fuel-economy standard by 5 percent each year, from 2017 to 2025. The standard for pickup trucks and other light-duty trucks would increase by 3.5 percent per year for the first five years and 5 percent for the last four model-years.

Although the agreement specifies 54.5 mpg as the goal, the actual wording states “performance equivalent to 54.5 mpg or 163 grams/mile of CO2." The Obama administration claims Americans will save $1.7 trillion dollars in fuel costs. Average fuel savings claimed will be more than $8,000 per vehicle by 2025. The administration also claims these new standards would cut more than 6 billion metric tons of greenhouse gases emitted during this program.

Due to the timeframe, the EPA and NHTSA will propose a mid-term evaluation in 2018 of how these standards impact manufacturers' costs, technology, and sales, according to the administration.

Also, the EPA and NHTSA are considering incentive programs to encourage adoption of fuel-saving and emissions-reduction technologies, including the following:

  • Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles
  • Incentives for advanced technology packages for large pickups, such as hybridization
  • Credits for technologies with potential to achieve CO2 reductions and fuel-economy improvements not captured by standard test procedures

In addition, the EPA said it plans to propose provisions for:

  • Credits for improvements in air conditioning (A/C) systems
  • Treatment of compressed natural gas (CNG)
  • Continued credit banking and trading, including a one-time carry-forward of unused MY 2010-2016 credits through MY 2021.

Companies and organizations involved in development of the proposed standard include Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, KIA, Mazda, Mitsubishi, Nissan, Toyota, and Volvo, the United Auto Workers Union, and the State of California.

The administration also releaed a new report entitled Driving Efficiency: Cutting Costs for Families at the Pump and Slashing Dependence on Oil, related to this initiative.

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