It's the biggest decrease in fuel economy standards since the 1970s.
"This agreement on fuel standards represents the single most important step we've ever taken as a nation to reduce our dependence on foreign oil," said the president.
The new standards are significant. You may remember back in 2008 the fuel standard was set for car manufacturers to hit 35 miles per gallon by 2016. But Friday the standard was changed to 54.5 miles per gallon by the year 2025.
"It means that filling up your car every two weeks instead of filling it up every week. It will save a typical family more than $8,000 in fuel costs over time," said the president.
The U.S. dependence on foreign oil will drop. It is estimated with the 54.5 standard American oil consumption will drop 40 percent and greenhouse pollution will be cut in half.
Just about every auto manufacturer is backing the new standards, especially those with high fuel-efficiency cars on the road today, like the Toyota Prius, Chevy Volt and the all-electric Nissan Leaf.
But the American Road and Transportation Builders Association (ARTBA) is concerned. They say if drivers are pumping less fuel into their cars, then there will be less tax revenue. And that could mean a loss of more than $65 billion in federal funding for state and local highway improvements.
On the other hand, a group of business advocates say an increase in fuel efficiency could create nearly 700,000 jobs nationally by 2030, including more than 60,000 jobs in the auto industry.