There have been many efforts to innovate automobile design funded by the NHTSA, including the work of the NavLab group at Carnegie Mellon University. Recent efforts include the highly publicized DARPA Grand Challenge race.

Relatively high transportation fuel prices do not significantly reduce car usage but do make it more expensive. One environmental benefit of high fuel prices is that it is an incentive for the production of more efficient (and hence less polluting) car designs and the development of alternative fuels. At the beginning of 2006, 1 liter of gasoline cost approximately $0.60 USD in the United States and in Germany and other European countries nearly $1.80 USD. With fuel prices at these levels there is a strong incentive for consumers to purchase lighter, smaller, more fuel-efficient cars. Greenpeace, however, demonstrated with the highly fuel efficient SmILE that car manufacturers aren't delivering what they could and thus not supplying for any such demand [citation needed]. Nevertheless, individual mobility is highly prized in modern societies so the demand for automobiles is inelastic. Alternative individual modes of transport, such as Personal rapid transit, could serve a an alternative to automobiles if they
prove to be cheaper and more energy efficient.
Lexus LF-A concept car at the 2006 Greater Los Angeles Auto Show
Lexus LF-A concept car at the 2006 Greater Los Angeles Auto Show

Electric cars operate a complex drivetrain and transmission would not be needed. However, despite this the electric car is held back by battery technology - a cell with comparable energy density to a tank of liquid fuel is a long way off, and there is no infrastructure in place to support it. A more practical approach may be to use a smaller internal combustion (IC) engine to drive a generator- this approach can be much more efficient since the IC engine can be run at a single speed, use cheaper fuel such as diesel, and drop the heavy, power wasting drivetrain. Such an approach has worked very well for railway locomotives, but so far has not been scaled down for car use.

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