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New 54.5 mpg rule ‘will change the way this industry operates’

After an unexpected delay, the White House has finalized the biggest jump in the Corporate Average Fuel Economy, or CAFE, standard since the government first set mileage guidelines in 1978.

As part of a broad compromise hammered out between the auto industry, environmental groups and government regulators, the fuel economy of the typical car, truck or crossover will nearly double between now and 2025, to an average 54.5 miles per gallon. That’s a more than 50 percent jump, meanwhile, from the CAFE rules the Obama rules had previously approved for 2016.

“These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil,” Obama declared, while also cutting CO2 emissions by an estimated 50 percent.

But far less certain is the impact the new rules will have on the auto industry and on the motorists of 2025. Naysayers have warned that, at 54.5 mpg, tomorrow’s cars will be smaller, largely battery-based and significantly more expensive. Proponents of the CAFE increase dismiss such forecasts as fear-mongering and insist things will change less than people anticipate.

For his part, Chrysler CEO Sergio Marchionne believes the industry will be able to make the new target – even though the rules do provide a mid-term analysis to ensure things remain on track. A future administration could roll the numbers back if there’s trouble.

via Bottom Line.

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