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White House Says MPG Announcement Coming Soon

Posted: 07/27/2011 - 2:42 PM ET

Even in the midst of an economic crisis that keeps escalating, the White House is hoping that as soon as this Friday it will be able to announce that an agreement has been reached with most automakers on the plan to make the target for corporate average fuel economy 54.5 mpg by the year 2025.

So far, no car company has actually committed to this plan, a pet project of the Obama administration, but most - among them Chrysler, Ford, General Motors and Toyota - have expressed their support, and their intention to sign on. Industry officials say the manufacturers have been trying to negotiate technical issues with White House representatives before endorsing even part of the plan, though it's not likely that across-the-board support from the auto industry will ever happen.

Despite the fact that a failure to comply with the mileage plan could mean stiff fines, to the tune of millions of dollars per company, three leading German carmakers, BMW, Daimler, and Volkswagen, may not endorse the plan at all. None of their representatives have offered specific comments on the issue.

Nevertheless, a spokesperson for the Obama administration has expressed pleasure in the fact that many domestic companies are giving strong feedback and favorable reactions. The administration believes discussions are likely to end sooner rather than later.

As disclosed to the auto industry earlier this week, the White House plan calls for mpg increases of 5 percent per year for passenger cars from model years 2017-2025, while the increase for SUVs and light trucks would be 3.5 percent per year from 2017-2021 before jumping to the same 5 percent requirement for the period from 2022-2025. The most lenient standards would be given to heavier trucks, like the Ford F-150.

In addition to the stated increases, the White House plan also includes a mid-course review clause, which would allow targets to be re-negotiated during the last part of that nine-year period if sales, technology and manufacturers' costs warrant doing so. It is likely that the requirements could be mostly-met during the early stages of the nine-year period by simply making alterations in the way gasoline-powered engines function, without the need for a significant increase in sales of hybrids or EVs.

Earlier today, the Wall Street Journal reported that most of the bigger car companies have now committed to the plan, but representatives of those companies insist that report is premature.

Once the White House makes the official announcement of the auto industry's endorsement of the mpg plan, the next step is to make a formal proposal of the new targets in September, and issue final approval next July.

If all goes as planned, by 2025, mpg requirements would be roughly double the current standard, and would be significantly higher than the 2016 target of 35.5 mpg.

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