Josh Miller/CNET

After more than a year of negotiations between government agencies, auto manufacturers, and other interested groups such as the United Auto Workers, the Obama administration has finalized rules that will raise the Corporate Average Fuel Economy (CAFE) to 54.5 mpg by 2025.

The administration had already set aggressive targets, previously calling for a CAFE of 35.5 mpg by 2016. As new advances in fuel-saving technologies showed that this target could easily be met, rules were drafted for the higher mark.

The Environmental Protection Agency and the Department of Transportation devise the formula by which CAFE is calculated. The CAFE number takes into account all of the cars and light trucks produced in a model year by a manufacturer.

New electric cars, such as the Honda Fit EV, with exceedingly high mile per gallon equivalent ratings, help raise an automaker's CAFE number, although the slight production numbers for these cars lessen the impact. Automakers have turned to new technologies to increase the fuel economy of their high-volume cars, bringing in such features as electric power steering, direct injection engines, and more advanced transmissions. Weight reduction and aerodynamic efficiency are also playing a part.

The administration says the new CAFE number will reduce U.S. oil consumption by 12 billion barrels, and halve oil imports from OPEC.