New Fuel Milage Standards

I see that Obama has announced the new Federal standards for fuel mileage. I understand on one hand why it was necessary for the Federal Government to do this, since each state was insistent on their own standards, which made it difficult for the automakers to meet various requirements. Do they make all cars meet California standards (adding the respective costs to each vehicle even though other states don't require them) or???

So it makes sense that the Federal government would reach a compromise, and from what I read, it looks like a good one. However, I always get worried when the government mandates anything since it adds costs that someone may not want to pay.

Shouldn't we let the market decide what product to build? The consumer (including yours truly) has already chosen to stop purchasing large SUVs as gas prices climb skyward, so the auto manufactures responded by stepping up production of smaller, more fuel efficient vehicles.

Like the VW commercial says, "the people want..."