U.S. Issues Stricter Fuel Efficiency Rules

The Obama administration has finalized fuel economy standards for the 2017-2025 model years that will nearly double the average efficiency of new cars and light trucks over the next 13 years to 54.5 miles per gallon.

Actual average fuel economy is expected to be roughly 40 mpg by 2025 because of temporary incentives, alternate-fuel credits, big-truck loopholes and differences in the test cycles used by government agencies.

The White House says the new regulations will halve greenhouse gas emissions by 2025 and reduce carbon dioxide exhaust by 6 million tons during the eight-year program. President Barack Obama says the new rules are his most important action to reduce U.S. dependence on foreign oil.

The new regulations are a victory for environmentalists and the administration, which mustered the support of most automakers in America and persuaded California to accept a nationwide standard. Carmakers won a phased-in start for light trucks and a promise that regulators will review of the program in 2018 to assess the state of vehicle technology.

Analysts note that meeting the standards probably will require companies to collectively sell millions of electric vehicles which may be more EVs than consumers want to buy unless fuel prices skyrocket.

The regulations will cost the auto industry an estimated $157 billion and hike average new-vehicle prices by about $1,800 per vehicle, according to the administration. It predicts the rules will save Americans $1.7 trillion in fuel expenses, or an average $5,700-$7,400 during a vehicle's lifetime.