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Obama's New Fuel Efficiency Standards as Unlikely as Obama Presidency

Volkswagen 2011 Touareg HybridThe 2011 Volkswagen Touareg Hybrid

In a move that seemed to appease environmentalists angered by yesterday's expansion of offshore drilling, President Obama announced today that he was significantly raising fuel-efficiency standards for cars and trucks. According to a new regulation from the National Highway Traffic Safety Administration and Environmental Protection Agency says that 2016 models will have to deliver an average of 35 miles per gallon across their entire fleet as well as improved tailpipe emissions standards. We'll save about 1.8 billion barrels in oil by not buying gas-guzzlers, but the costs for both carmakers and consumers will be significant: Carmakers will need to spend an estimated $51.5 billion over five years, and new cars purchased in 2016 will be about $985 more. However, drivers of any fuel-efficient vehicles will spend less on gas over time.

In an interesting twist that will help soften the blow for automakers who will have to pour money into R&D and reconfigure their factories, each company will have its own unique target based on the kinds of vehicles it produces. So companies like Honda that make mostly small, efficient vehicles will have higher standards compared to brands like Jeep, whose larger cars and trucks consistently fare the worst in mileage tests (13 mpg for the Commander!). Auto companies can also get credits for reducing emissions, for example, engineering more efficient air conditioning systems.

Chevy VoltThe Chevy Volt, an innovative new electric car

35 mpg is a fairly lofty goal for automakers: the Smart Fortai Passion is the most efficient subcompact and only gets a few miles better than that, about 39 mpg. When you break down the goals over the next six years, it starts to get even more apparent how far some automakers have to go. SUVs and light trucks will definitely have the worst of it: Carmakers are looking at achieving 25.4 mpg by 2012 and 28.8 mpg by 2016. Compare that to Volkswagen's first hybrid, the SUV Touareg, which debuted this week, and only gets 21 mpg city/25 mpg highway.

Passenger cars must increase their mileage from 33.3 mpg to 37.8 mpg in 2016, which will certainly encourage companies who are toying with innovative hybrid models to plunge into production. Expect to see more cars like the Chevy Volt that test-drove this week, which can drive 40 miles on an electric charge, at which time it switches over to a gas-powered generator. Let's hope as the mpg requirements rise, so does innovation in auto design.