New vehicles in the U.S. from the 2017 model year averaged slightly better gas mileage than the previous year, rising to a record 24.9 mpg, according to an annual report from the Environmental Protection Agency.
But the mileage rose only 0.2 mpg, and environmental groups say it fell short of a 1 mpg increase required under standards enacted during the Obama administration.
To make up the difference, automakers used credits for zero emissions vehicles and other fuel-saving measures that aren't included in EPA test cycles. The agency and the Department of Transportation say that's evidence the industry will have trouble meeting standards as they rise through 2025.
The Trump administration has proposed freezing the standards at 2021 levels.
But environmental groups and the state of California say the standards should remain in place and that automakers have the technology to meet them. The administration's move to freeze them , while not finalized, already has brought a court challenge from California and other states that follow its standards.
The administration last month broke off negotiations with California on fuel economy and greenhouse gas emissions, and the matter probably will be tied up in the courts for years.
After ending the talks with California, administration officials held a conference call with automakers and began pressuring them to take its side in the dispute, according to four people who were either on the call or briefed on it. They spoke on condition about the Feb. 21 private call because of fear of retaliation from the administration.
On that call, a White House official told industry representatives that they had to decide whether they were in favor of "regulatory relief" or whether they wanted to side with California, according to two of the four people. One described the call as "testy" and the other said the industry was told it needed to take a side.
No one said any threats were made, but the industry fears tariffs on imported vehicles and parts, and one person pointed out that the Obama administration also pressured the industry to agree to fuel economy requirements.
The White House declined to comment on the specifics of conversations the administration is having with groups with stakes in the matter.
In the meantime, the standoff over fuel economy leaves the auto industry uncertain over what vehicles it must build. For now, the Obama-era regulations remain in effect, and auto companies are not sure what standards they have to meet for 2022 and beyond. A decision by the current administration is expected this spring.
Automakers have said they want the federal government to reach agreement on one national standard with California, which has authority to set its own mileage and emissions standards under the Clean Air Act. The administration is likely to challenge that.
EPA Administrator Andrew Wheeler said in a statement Wednesday that the agency's proposed changes "will allow the industry to meet aggressive yet attainable standards, reduce the price of new vehicles and help more Americans purchase cleaner, safer and more efficient vehicles."
But environment groups said that even with use of the credits, the industry is meeting the standards and can continue to do so.
"While the Trump administration is moving to gut the clean car standards, its own data shows the current standards are working. Automakers are innovating and improving the performance of their fleets, and tailpipe emissions continue to plummet," said Luke Tonachel, director for clean vehicles and fuels at the Natural Resources Defense Council.
The EPA and the auto industry both say that as Americans shift from more efficient cars to trucks and SUVs, the industry is having trouble meeting the standards. The EPA report said that SUV sales reached a record 43 percent in 2017, with cars and wagons falling to 41 percent, about half their market share in 1975. The rest were trucks.
But Tonachel said the Obama-era standards are flexible, reducing requirements for automakers if they sell more trucks and SUVs.
"They are selling more trucks yet still meeting the standards because the standards automatically adjust to the mix of vehicles they sell," he said.
The EPA report said that car mileage increased by 1 mpg in 2017, while SUV mileage increased only 0.1 mpg.
Only Honda, Subaru and BMW met the mileage and pollution standards without using credits, according to the report.