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Cars which run on Hydrogen are more commonly confused with water-powered cars. So, Per see, the car is dubbed "water powered" because the car extracts the hydrogen from the water and uses the gas to run its' engine. It does this by splitting the oxygen from the Hydrogen/water by way of electrolisys in a small tank in the boot, feeding the engine in the same way as a petrol powered car. But a Hydrogen powered car uses only one or two moving parts in the engine.

For alot of people, the thought of the worlds' fuel resources deminishing would be the end of the automobile. And efforts to design a new engine/fuel cell were proving very difficult until the Hydrogen cell was introduced not too long ago. Many, if not all, are hailing the design as the saviour of mankind.

http://news.bbc.co.uk/2/hi/business/7456141.stm

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