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Obama Administration Unveils New Fuel Economy Labels For Vehicles, Drops Grades

Ray Lahood Lisa Jackson

First Posted: 05/25/11 03:26 PM ET Updated: 07/25/11 06:12 AM ET

WASHINGTON -- The Obama administration on Wednesday announced new fuel economy labels for vehicles, including new ratings for plug-in hybrids and electric cars, but nixed a plan to assign vehicles "A" through "D" grades based on efficiency.

Announced this morning by Environmental Protection Agency chief Lisa Jackson and Transportation Secretary Ray LaHood, the new labels offer consumers shopping for a new car information on expected savings over a five-year period, as well as a fuel economy comparison to other cars in the same class.

"These labels will provide consumers with upfront information about a vehicle's fuel costs and savings so that they can make informed decisions when purchasing a new car," LaHood said in a statement Wednesday. "This is one part of President Obama's plan to provide Americans with relief from high gas prices and break our dependence on foreign oil."

Vehicles are rated from one to 10, with 10 being the most desirable, across a variety of areas, including smog and greenhouse gas emissions.

The labels feature a QR code allowing consumers at a dealership to personalize fuel cost estimates and compare vehicle models based on fuel economy. By entering information about their commutes and driving behavior, consumers can obtain a more precise estimate of fuel costs.

"The EPA and DOT are creating a new generation of fuel economy labels to meet the needs of a new generation of innovative cars," Jackson said Wednesday.

The elimination of letter grades, which would have discouraged consumers from purchasing inefficient vehicles, is considered a victory for automakers. The Alliance of Automobile Manufacturers, the industry's main trade group, has been an especially vocal opponent of the system.

"The addition of a large, brightly colored letter grade may confuse the public about what is being graded and it risks alienating the consumer who has a valid need for a vehicle that does not achieve an 'A,'" based on greenhouse gas emissions, said Auto Alliance spokesman Wade Newton in a statement on Thursday.

But when asked in a conference call with reporters on Wednesday why the grades have been dropped, Jackson insisted they were merely unpopular with American consumers.

"When we did focus groups it was split right down the middle ... which told us at least half the people wouldn't be comfortable with a letter grade," Jackson said. "It's all about the consumer here," she added, "and letter grades were something we wanted to test, but they didn't test so high that they were something we wanted to include."

The 2010 fuel economy rule, which covers model years 2012 through 2016, will save an estimated 1.8 billion barrels of oil over the life of the program and the average consumer $3,000 in fuel costs.

In July, the administration plans to finalize the first-ever standards for commercial trucks, vans and buses built from 2014 to 2018. The standards promote the development and use of alternative fuels and are expected to save hundreds of millions of barrels of oil over the life of these vehicles. The administration is also working on the next generation of greenhouse gas emission standards for model years 2017 to 2025 and plans to announce a proposal in September.

New passenger cars and trucks will be required to display the new labels starting with model year 2013, though automakers may voluntarily adopt the labels earlier for model year 2012 vehicles.

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