With two of Detroit's big three auto makers no longer able to resist, the Obama White House on Tuesday announced sped-up fuel economy standards that will require all auto makers, including Detroit's foreign competitors, to increase fleet fuel efficiency by 5% a year starting in model year 2012.

The new rules will require a fleet fuel efficiency standard of 35.5 miles per gallon by model year 2016, a big jump from the 2009 model-year requirement of 25 m.p.g. A senior Administration official said the changes (when compared to current pollution and vehicle-use totals) will have the effect of removing 900 million metric tons of carbon dioxide from the air, taking 177 million cars off the road, and shutting down 194 coal-fired power plants.

A senior Administration official called the standards "tough and historic" and predicted it will be achieved with only minor modifications to vehicle and engine design.

The official said "off-the-shelf" technology will allow most auto makers to retrofit their cars, light truck and sport-utility vehicles "without dramatically changing them."

For 2016 -- the final year new the rules will apply -- the fleet fuel-efficiency standard for all domestically sold passenger cars will be 39 m.p.g. It will be 30 m.p.g. for all domestically sold light trucks and SUVs. The average of these two equals a passenger-car and light-truck fuel efficiency standard of 35.5 m.p.g. The current requirements are 27.5 m.p.g. for cars and 23.1 m.p.g. or trucks. 

The tighter standards will first affect the 2011 model year for cars and trucks.

An official said consumers will still have a wide range of options on vehicle design and horsepower because "every single category of vehicle has to become more efficient." The uniformity of change, the official said, "will preserve" options for the vehicle-buying public.

The Administration will also impose the first-ever tailpipe emission standard for every class of vehicle -- a move that will bring regulations of fuel efficiency and pollution under one set of rules. The Department of Transportation and the Environmental Protection Agency will, for the first time ever, jointly monitor and enforce fuel-efficiency and tailpipe-emission standards.

The standards are expected to increase the cost of a vehicle, on average, by $1,300 by 2016. A senior Administration official predicted that cost would largely be offset by savings in gasoline expenses over the life of the vehicle.

The Consumer Federation of America’s Director of Public Affairs Jack Gillis said that at an estimated $3 a gallon for gasoline in 2016, car buyers would save $500 a year.

Detroit's Big Three -- General Motors (GM), Ford Motor (F) and Chrysler -- had long resisted the kind of fuel-economy standards they will embrace at the White House on Tuesday. But with the government having poured billions of dollars into GM and Chrysler, and with Chrysler in the throes of a government-supervised bankruptcy and GM facing the possibility of a similar fate by month's end, industry leverage appears to be minimal.

Ford also embraced the new rules, even though it has not received any federal bailout funds.

“Today’s announcement signals the achievement of a crucial milestone – an agreement in principle on a national program for increased fuel economy and reduced greenhouse gases,” Ford President and CEO Alan Mulally said in a statement. “We salute the cooperative efforts of the Obama Administration, the state of California, environmental groups and others that played a constructive role in this process… We will continue to work with the federal agencies to finalize the standards that we are committed to meeting.”

The domestic auto makers do not leave empty-handed, though. They won from the government a commitment to a single set of fuel and pollution standards until the 2016 model year. Detroit was far behind its foreign competitors on fuel efficiency and faced the frightening prospect of manufacturing cars to meet two sets of standards -- California's and the federal government's.

The new rules will incorporate California's tougher standards but eliminate any market uncertainty -- a move one industry source compared to allowing Detroit's big three to walk into the future carrying one anvil instead of two.

President Obama announced the moves Tuesday at a huge White House ceremony designed to underscore cooperation among auto makers, environmentalists and the two governors whose states have most closely watched the fate of U.S. auto-making -- Republican Arnold Schwarzenegger of California and Democrat Jennifer Granholm of Michigan.

California approved tougher fuel efficiency standards and was eyeing a June 30 ruling from the Environmental Protection Agency to enforce them. California ordered a fleet average of 35.5 m.p.g. by 2016. The old federal standard sought that efficiency by 2020.

The new federal standards match California's -- but do so in a way that protects Detroit from having to produce one fleet of cars to meet the tougher California standard (embraced by 13 other states) while simultaneously producing another fleet that met the more lax federal standards.

"It's going to be tough to meet these new standards," said one domestic auto source, "but there is industry buy-in behind having one national standard."

The White House ceremony attracted auto heavyweights such as GM Chairman and CEO Fritz Henderson, Chrysler CEO Robert Nardelli, Ford’s Mulally, and Ron Gettelfinger, president of the United Auto Workers union.

Representatives from other car makers such as Toyota Motor (TM), Honda Motors Corp (HMC) and Nissan (NSANY) also attended, as well as representatives from the environmental movement.

Chad Pergram and Peter Barnes also contributed to this report.