In May, President Obama announced new tougher fuel economy standards to take effect in 2012. Yesterday, his administration released the proposed 1,227-page set of regulations for implementing the standards, which require cars to average 35.5 mpg by 2016.

President Obama at GM Plant

Appearing yesterday at a General Motors plant in Warren, Ohio, President Obama said that building more fuel-efficient cars is helping the US auto industry bounce back.

The regulations explicitly state that car companies can meet the new standards largely by using existing technologies: “These include improvements to engines, transmissions and tires; increased use of start-stop technology; improvements in air-conditioning system; increased use of hybrid and other advanced technologies; and the initial commercialization of electric vehicles and plug-in hybrids.”

As usual, the devil is in the details. For example:

  • Automakers would be allowed to continue building and importing all classes of vehicles, from the smallest sub-compacts to the largest SUVs. (See CAFE Footprint Formula Explained.)
  • Under the regulations, automakers will continue to be able to claim mpg credits—amounting to a reduction of 1 to 1.5 miles per gallon if fully employed—by selling so-called flex-fuel vehicles capable of using a blend of gasoline and ethanol.
  • Automakers selling fewer than 400,000 vehicles in the United States—including Mercedes, BMW, Subaru and Volkswagen—would be allowed to meet a weaker standard.

The regulations now go through a 60-day public comment period. The US Chamber of Commerce and a group of automakers are expected to challenge the rules in court.