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Published: Thursday, 7/28/2011

Deal boosts fuel efficiency

Compromise: Automakers' fleets to average 54.5 mpg by 2025

REUTERS

WASHINGTON -- The Obama Administration has reached a compromise with automakers on the target for significantly boosting fuel efficiency for cars and light-duty vehicles by 2025, ending months of negotiations on this pivotal mandate for the auto industry.

Automaker fleets will have to average 54.5 miles a gallon by 2025, according to sources familiar with the plan.

President Obama will officially announce the new guidelines Friday, the White House said.

The compromise would be slightly less than the administration's original proposal, but a major step up from current standards that require automakers to achieve 35.5 mpg by 2016.

The administration had considered increasing average fuel efficiency to 56.2 mpg between 2017 and 2025, but that plan ran into opposition from the industry and some lawmakers.

The push to boost fuel efficiency has forced automakers to redesign vehicles and use lighter but more expensive materials.

These efforts are likely to raise the cost of vehicles and may pinch automakers' margins.

That has caused resistance from lawmakers in states with a heavy auto manufacturing presence, as well as the United Auto Workers union, which is concerned about jobs.

The new proposal includes average increases in fuel economy of 5 percent for cars and 3.5 percent for light trucks through 2021, with a 5 percent increase for all vehicles after that.

Ford Motor Co. spokesman Meghan Keck said there are still some issues that need to be worked out regarding the new standards.

"We continue to believe that the talks are productive, that there are a couple of details that we're still ironing out and that we hope to be able to say more soon," she said.

U.S. passenger vehicles emit about 20 percent of the nation's carbon emissions and consume about 44 percent of its oil, figures show.



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