Humility demands that we acknowledge that we have no idea what the personal automobile will look like in the future. It might be that hydrogen-powered fuel cells are on the economic horizon and battery technology will advance to such an extent that we will see the introduction of low-cost, high-performing all-electric vehicles or plug-in hybrids.
But technological advances might make super-efficient internal-combustion engines a reality. Maybe advanced cellulosic ethanol or methanol will emerge as the lowest-cost fuel of the future. Or perhaps less exotic natural gas-fired or synthetically fueled cars (essentially turning coal into oil) are in the cards. Unless you have access to some sort of time machine, you simply don't know.
We also can't discount the possibility that oil prices will return to the historic mean (as they always have) and that the cars of tomorrow will look a lot like the cars of today. A recent statistical analysis of world crude oil prices from 1970 to the first quarter of 2008 by UC San Diego economist James Hamilton finds no statistically significant scarcity signal whatsoever. He concludes that "the real price of oil seems to follow a random walk without drift." He pointedly notes, "It is sometimes argued that if economists really understand something, they should be able to predict what will happen next. But oil prices are an interesting example (stock prices are another) of an economic variable which, if we really understand it, we should be completely unable to predict."
We do know, however, that given the high price of gasoline at present and public anxiety about reliance on foreign oil and greenhouse gas emissions, market actors have both the means and motive to pursue promising avenues of research. What need is there for "carrots and sticks"?
Using "financial carrots" -- your euphemism for tax dollars -- to engage in this sort of thing allows corporations to hijack my earnings for their ends by using the public treasury to pay for what otherwise would have been paid for by corporate stockholders.
Using "regulatory sticks" to promote preordained geologic, demographic and technological realities introduces the possibility of error. If the government makes the wrong bet(s), promising technologies and industries will emerge less quickly and time and money will be wasted promoting commercial dead-ends.
I think most people would agree with me that automobile manufacturers are primarily interested in making money. I don't think I'm going out on a limb here by suggesting that the best means of doing that is to produce cars that people want to buy. If oil prices continue to rise and batteries and fuel cells perform better, consumers will want to buy that kind of car, automakers (in a lust for profit) will move heaven and Earth to make those cars, and all will be well. If, however, about future oil prices return to the historic mean or there are technological advances along any number of scientific fronts, these policy proscriptions will do more harm than good.
I don't necessarily "hate subsidies and government regulation." I do, however, deeply distrust their utility in the automotive and energy arenas for two very good reasons. First, I distrust the ability of politicians to say no to well-organized special interests that are quite adept at rigging the market to the detriment of the public under the cover of solving social problems (see the ethanol boondoggle). Second, I doubt the omniscience of policy planners who pretend to know with ridiculous certainty what the future may hold on multiple hard-to-predict scientific and economic horizons.