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 car designs and the development of alternative fuels. In addition to rising fuel costs, the fact that cars also drive suburban sprawl is forcing people to reassess the actual social and environmental impact of the car [citation needed]. 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.

Electric cars are driven by electric motors which are more efficient than internal combustion engines and have a much greater power to weight ratio.  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 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*

*source: Wikipedia, used with permission