CAFE standards set to rise to 54.5 mpg for 2025

President Barack Obama on Friday revealed ambitious plans to raise the corporate average fuel economy standard for cars and light trucks to 54.5 mpg by the 2025 model year, a landmark move that will dramatically remake carmakers' product portfolios and consumers' buying habits.

Unlike the first CAFE standards passed by Congress in 1975, the Detroit automakers now publicly support the high requirements and have begun retooling their fleets to adapt the changes.

“[This] represents the single most important step we've ever taken as a nation to reduce our dependence on foreign oil,” Obama said in a morning press conference.

The UAW has also voiced its support for the new rules after earlier expressing concerns. California legislators, who have pushed for strict fuel-economy standards, also are on board with the new regulations.

The president's plan was finalized after weeks of wrangling that saw the original number--56.2 mpg--slightly softened. The requirements will be phased in, giving automakers time to adapt. The increases would begin taking effect for 2017 trucks and 2018-model-year cars.

With car executives and union officials on hand, Obama lauded the agreement reached, despite considerable anxiety over the costs and future complications the mpg requirements could cause.

“We set an aggressive target, and the companies here are stepping up to the plate,” the president said. “This is an incredible commitment that they've made.”

The move comes as fuel prices remain elevated, with a gallon of unleaded gasoline costing $3.71 on Friday morning, up nearly a dollar from a year ago.

Obama's announcement is timely, as research shows that Americans are looking for more fuel-efficient cars and national guidelines. The Pew Charitable Trusts said 82 percent of people surveyed in early July favor the elevated figure, which was cited as 56.2 mpg at the time of the research.

Obama said that the new requirements would save a typical family $8,000 a year in fuel costs, though he didn't offer specifics.

Carmakers almost universally came out in praise of the new requirements--perhaps not wanting to be on the wrong side of history.

"GM plans to pursue the technical challenge ahead and to lead in delivering new fuel-saving technologies in cars and trucks customers want to buy and can afford," the company said in a statement. "Reducing fuel consumption and lessening the automobile's impact on the environment is important to our business because it's important to our country and our customers."

Toyota concurred:

“Toyota has embarked on the most aggressive expansion of hybrid, electric and hydrogen-fuel-cell cars of any automaker, and we are committed to continuing our demonstrated environmental leadership,” Toyota Motor Sales COO Jim Lentz said in a statement. “We share the administration's goal of achieving major advances in clean, fuel-efficient vehicles. 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.”

Prepping for the new rules

Signs that carmakers are beginning to revamp their lineups are evident. Coincidentally, or not, BMW choose Friday to reveal two concepts--the i3 and the i8--that will form the foundation of its new alternative-propulsion division.

Chevrolet announced plans last week to bring a diesel variant of the Cruze to the U.S. market that would likely get more than 50 mpg.

Ford said earlier this year that it will make the C-Max an all-electric lineup, meaning consumers can choose a hybrid powertrain or the pure EV model, scratching plans for a conventional gasoline version.

Chrysler, meanwhile, has been augmented by Fiat technology, and the 500 is rolling out across the nation to acclaim and impressive fuel-economy ratings. Dodge is also slated to get a high-mileage car, likely about 40 mpg. It would be based on Alfa Romeo underpinnings.

By Greg Migliore