Water is the key, your correct on that.
The problem is in how we split it, and where, and the safe transport & storage of tons of Hydrogen.
What we really need is a way to weaken the nucular bonds holding those 2 hydrogen & oxygen atoms together. If we can figure that out, then we can actually do that in the car instead of in some plant.
Nucular power is not the answer, we don't have a way to get rid of the waste we already have. Short of useing Lebenon & Afganistan as a nucular waste dump.
So we need to do the electrolisis in the vehicle, on demand. That way there is no storage issue, all we need to fill our car with is water.
I think the answer is going to be frequency, like the movie "cold fusion".
But finding the right process/frequency, thats the kicker.
The only other rational alternative is to go back to steam, or steam/electric hybrid. Use biomass to power everything. Switchcrass, wood, corn, its all renewable resources. Which means every fall we have a whole new supply to harvest. Best of all it takes the ball out of the middle easts hands. Puts it square back in our court.
Start by figuring how to heat your home with Corn, Wood pellets, or Wood this winter. Instead of Fuel Oil, Propane, & Natural Gas. You'll save yourself money, and help turn this thing back around.