By Ayesha Rascoe and Deepa Seetharaman
WASHINGTON/DETROIT (Reuters) - The Obama administration has reached a compromise with automakers on a new fuel economy target for cars and trucks, ending months of negotiations on this pivotal mandate for the auto industry.
Automaker fleets will now have to average 54.5 miles per gallon by 2025, according to people familiar with the plan.
Chief executives at the major automakers could sign off on the plan as early as Wednesday night, one of the people said.
U.S. President Barack Obama will officially announce the new guidelines on Friday, the White House said.
The White House would not comment on the substance of the negotiations, but spokesman Jay Carney said the agreement would result in "significant cost savings for consumers at the pump" and cut pollution and reduce oil consumption.
The compromise is slightly less than the administration's original proposal for corporate average fuel economy, or CAFE, standards. But it is a major step up from current standards that require automakers to achieve 35.5 mpg by 2016.
Earlier, the administration had proposed increasing the CAFE target 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 automaker 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.
One person said there will be a midterm review that may allow trucks to stay below the 5 percent target after 2021.
Sources told Reuters that some overseas automakers were reluctant to embrace the plan because of the more phased in schedule for light trucks, which remain a bread and butter segment for U.S. manufacturers and include pickups, SUVs and vans.
STILL IRONING OUT DETAILS
But the biggest sellers - General Motors Co (GM.N), Ford Motor Co , Chrysler, which is run by Italy's Fiat (FIA.MI), Toyota Motor Corp and Honda Motor Co (7267.T) -- are all expected to sign on to the agreement, which will be the backbone of a new federal rulemaking on fuel economy.
Obama has pushed hard for sharply higher fuel efficiency through new technologies like improved batteries for gas/electric hybrids and electric cars.
Ford spokeswoman Meghan Keck said there are still some issues that need to 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 say more soon," Keck said.
While declining to discuss the 54.5 mpg figure, Toyota spokeswoman Martha Voss said discussions on the new rules have been "positive."
Environmental groups and Democratic leaders have pushed for strong fuel economy standards to lower carbon dioxide emissions and decrease U.S. oil use.
"These new fuel efficiency standards represent the single greatest step our country has taken to reduce our dependence on foreign oil and to encourage a new generation of advanced vehicle technology entrepreneurs," said Representative Edward Markey in a statement.
U.S. passenger vehicles emit about 20 percent of the nation's carbon emissions and consume about 44 percent of its oil, figures show.
(Additional reporting by Tabassum Zakaria and Roberta Rampton and John Crawley in Washington and Ben Klayman and Bernie Woodall in Detroit; Editing by Paul Simao, David Gregorio, Gary Hill)
Our 2024 Coverage Needs You
It's Another Trump-Biden Showdown — And We Need Your Help
The Future Of Democracy Is At Stake
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
The 2024 election is heating up, and women's rights, health care, voting rights, and the very future of democracy are all at stake. Donald Trump will face Joe Biden in the most consequential vote of our time. And HuffPost will be there, covering every twist and turn. America's future hangs in the balance. Would you consider contributing to support our journalism and keep it free for all during this critical season?
HuffPost believes news should be accessible to everyone, regardless of their ability to pay for it. We rely on readers like you to help fund our work. Any contribution you can make — even as little as $2 — goes directly toward supporting the impactful journalism that we will continue to produce this year. Thank you for being part of our story.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
It's official: Donald Trump will face Joe Biden this fall in the presidential election. As we face the most consequential presidential election of our time, HuffPost is committed to bringing you up-to-date, accurate news about the 2024 race. While other outlets have retreated behind paywalls, you can trust our news will stay free.
But we can't do it without your help. Reader funding is one of the key ways we support our newsroom. Would you consider making a donation to help fund our news during this critical time? Your contributions are vital to supporting a free press.
Contribute as little as $2 to keep our journalism free and accessible to all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you'll consider contributing to HuffPost once more.
Support HuffPostAlready contributed? Log in to hide these messages.