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What the New Fuel Economy Standards Mean for You

Summary: 
The Administration has announced new standards that will increase fuel economy to the equivalent of 54.5 miles per gallon for cars and light-duty trucks by model year 2025. Learn more about how these standards will curb pollution, spur jobs, and save consumers money at the gas pump.

When President Obama came into office, fuel efficiency standards for cars had not budged for two decades, and American consumers were losing out as a result.  Thanks to the newest fuel efficiency and greenhouse gas standards finalized this week, the Administration has now guaranteed steady improvements for our cars and light trucks from model year 2011 through 2025. 

The Administration’s standards represent the single biggest step the U.S. has ever taken to reduce dependence on foreign oil and cut harmful carbon pollution, and they will save consumers more than $1.7 trillion at the gas pump.  They were supported by a diverse crowd of stakeholders – including 13 major auto companies that together represent more than 90 percent of U.S. sales, as well as the United Auto Workers, consumer groups, and environmental organizations.

This action is clearly historic, but what will it mean for individual car buyers?  Because numbers like $1.7 trillion can be hard to grasp, here are answers to a few commonly asked questions about what the new fuel efficiency standards mean for Americans.

1. What will the effect of the 54.5 mpg target be on drivers?

An easy way to think about the effect of these standards is that average fuel efficiency of a car or light truck purchased in 2025 will be roughly double what these vehicles were required to achieve before 2011, when the Administration’s first round of new standards took effect.  So if you currently fill up at a gas station every week, you’ll only need to stop every two weeks.

2. Will more efficient vehicles still be affordable?

Yes.The incremental costs of technologies that improve vehicle efficiency are recouped several times over by savings at the gas pump. In fact, consumers purchasing a vehicle with a standard 5-year loan can expect to benefit from day one as fuel savings offset higher payments in the very first month of ownership.

Another way to think about it: net savings (after accounting for any vehicle cost increase) for the owner of an average 2025 vehicle will be equivalent to a drop in fuel prices of $1 per gallon.

3. Will I still have the option to choose a large car with these standards?

Absolutely. The standards are designed to preserve consumer choice and allow you to choose the vehicle size that best meets your needs. Although we often talk about a 54.5 mpg-equivalent average for the industry, individual fuel economy and emissions requirements actually vary based on the size of a vehicle. A manufacturer’s fleet comprised of smaller cars must meet a higher mpg target than a fleet made up of larger vehicles, reflecting the different fuel economy capabilities of smaller and larger vehicles.

The standards also do not require specific technologies, but instead allow automakers to meet their fuel efficiency and greenhouse gas targets however they choose. In fact, manufacturers are expecting to deliver the required savings with a wide range of vehicle technologies. While these include advanced vehicles – like natural gas, hybrid, plug-in hybrid, electric, and fuel cell vehicles – they also include very substantial improvements in gasoline and diesel vehicles, from advanced transmissions to highly efficient engines to improved aerodynamics. As a result, consumers will have many options to save on fuel.

4. Do I have to wait until 2025 to save?

There’s good news on that front too. The standards deliver steady year-after-year improvements (see chart above), and purchasers of new vehicles today are already saving at the pump as a result of the Obama Administration’s first round of car and truck standards. As we’re seeing in showrooms today, automakers are stepping up and selling some of the most fuel efficient and cleanest vehicles ever available.

Drew McConville is Senior Advisor to the Chair of the White House Council on Environmental Quality