Feds To Mandate Up To 62 MPG By 2025; What Does It Mean For You?

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Sample used-car window sticker showing gas mileage, for a 2000 Honda Insight

Two days ago, the NHTSA said that it would require annual gas-mileage improvements of somewhere between 2 and 7 percent each year between 2017 and 2025.

Corporate average fuel economy requirements have already been set through 2016, an action facilitated by the Obama Administration soon after taking office.

In 2016, across the entire vehicle fleet weighted by sales, new-vehicle gas mileage will have to average 34.1 miles per gallon.

47 to 62 mpg?

U.S. Environmental Protection Agency adminstrator Lisa Jackson and President Barack Obama

U.S. Environmental Protection Agency adminstrator Lisa Jackson and President Barack Obama

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Now, the National Highway Traffic Safety Administration has issued a notice in the Federal Register on its rulemaking for the period after that, for model years 2017 through 2025.

Final rules will be issued next year.

The notice says the agency won't require less than 2 percent increase in gas mileage each year, but it said it has "tentatively concluded" that the maximum possible improvement that automakers could achieve would be 7 percent.

That would mean average fuel efficiency reaching 47 to 62 miles per gallon by 2025--though the agency said it would assess the progress of technology in about 2020 before finalizing numbers for 2022-2025.

Costs and payback periods

The NHTSA is now researching the impacts of the different improvement levels, including the environmental benefits, the costs--to automakers and consumers--and the effects on auto safety.

2011 Nissan Leaf electric car during IIHS crash testing

2011 Nissan Leaf electric car during IIHS crash testing

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Depending on the final level, vehicle cost would increase from $770 to $3,500, the agency said. Consumers would see a payback on the higher cost of a 6-percent improvement within four years, according to its modeling.

Projections from the Center for Automotive Research in Ann Arbor, Michigan, are more dire. A fleet average of 60 mpg, it says, would raise vehicle prices 22 percent, slash sales 25 percent, and cost hundreds of thousands of auto-industry jobs.

Unfortunately, retail car buyers historically overweight the initial puchase price and undervalue the impact of total ownership cost, including fuel expenses.

In other words, lower price is always more important than running costs--even if it doesn't make economic sense.

Same safety, more hybrids

But what would the increases mean for car-buying consumers?

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