54.5 MPG by 2025?

White House to announce fuel-economy deal with automakers

WASHINGTON -- U.S. fuel economy standards would double by 2025 under a deal the White House announced Wednesday with automakers and environmentalists, reported The Wall Street Journal. If upheld, the plan would lead to the biggest gains in fuel economy since government began setting mileage regulations in the 1970s and could lead to substantial changes to the cars and trucks most Americans drive, said the report.

Nine automakers have told the White House they will endorse a plan that would push corporate average fuel economy to 54.5 miles a gallon between 2017 and 2025, [image-nocss] people familiar with the talks told the newspaper. Mazda Motor Corp. and Daimler AG oppose the plan, one of the people said.

"Our current understanding of the proposal raises some concern, and we're continuing to review it," a spokesperson for Daimler's Mercedes-Benz unit told the paper.

The proposal calls for a 5% average annual increase in fuel economy for cars and a 3.5% increase for light trucks through 2021. After 2021, both would face a 5% annual increase. Credits for technologies such as solar-panel roofs and battery-powered vehicles could allow automakers to comply without reaching 54.5 mpg. The plan also offers credits for hybrid trucks, alternative fuels and other ways of improving fuel economy in ways that often do not register in traditional Environmental Protection Agency (EPA) mileage tests.

In a key concession to automakers, the White House also agreed to review the rules part way through the implementation cycle to determine if they are overly harsh or lenient given fuel prices, consumer behavior and technological advancements, the report said.

As of Wednesday, Toyota Motor Corp., General Motors Co., Ford Motor Co., Chrysler Group LLC, Honda Motor Co., Hyundai Motor Co., Nissan Motor Co., BMW AG and Volvo had told the administration they would support the plan, sources told the Journal.

The leeway for trucks had been a sticking point for Japanese auto makers, which sell fewer pickups and large sport-utility vehicles (SUVs) than the Detroit automakers. Winning over the major non-U.S. automakers including Toyota was important to the administration as it sought to fend off criticism that its plan favored Detroit, said the report.

The support likely clears the way for the administration to officially propose a plan by its September 30 goal. President Barack Obama will announce the deal Friday during a ceremony at the Washington, D.C., convention center along with auto maker CEOs and environmental groups.

The White House has said the regulations will save drivers as much or more in fuel costs than it adds to the prices of cars over time, but industry officials remain skeptical that customers will accept more expensive, or smaller, vehicles absent tax credits, or high gasoline prices, the Journal said. Once proposed, the rules face a public comment period and revisions before being sent to regulators for enforcement.

An executive with a European auto maker said the plan is unlikely to motivate automakers to build vehicles capable of running on diesel fuel. Volkswagen AG, Daimler and BMW have heavily invested in advanced diesel engines, arguing that their fuel economy, especially on long journeys, is superior to that of hybrid vehicles.

"It's clearly inequitable and favors manufacturers of full size trucks," the executive told the paper. "It could have an adverse effect on real world [gasoline] consumption by driving consumers to trucks."

The approvals came after the White House lowered its target to 54.5 mpg from 56.2 mpg and offered concessions for trucks, the report added. The current fleet fuel economy standard is 27.3 mpg. The auto industry last year agreed to a 35.5 mpg fleet average by 2016.