New CAFE MPG standards for 2025

Last week, President Obama announced new Corporate Average Fuel Economy (CAFE) standards for 2025 that the majority of automotive manufacturers have apparently embraced. The mandate? It’s 54.5 miles per gallon! But before you get too excited—or become up in arms with skepticism that 54.5 mpg is even possible to achieve—there is something you should know about this figure.

For the purpose of CAFE, the Environmental Protection Agency (EPA) uses one formula to calculate a car’s fuel economy. However, the EPA gas mileage ratings presented to car shoppers is a different calculation meant to reflect real-world conditions, including stop-and-go driving and air conditioner usage. This means for a given car, the CAFE gas mileage rating will always be better than the EPA figures listed on a new car window sticker.

For example, a new car with a 29 MPG EPA rating will have a CAFE rating of 39 MPG—or 34% better. By our estimates, 54.5 MPG CAFE = 40.5 MPG EPA.

The 2025 CAFE standard therefore looks doable. Cars like the Ford Fiesta, Hyundai Elantra and Chevy Cruze are already yielding 40+ MPG on the highway, and the 2011 Toyota Prius is rated 50 MPG for the combined city/highway cycle. So while the auto manufacturers do have some work cut out for them over the next 14 years to achieve the CAFE mandate, we don’t think their engineers are pulling all-nighters or having nightmares quite yet.

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