Hydrogen cars use the reaction between hydrogen and oxygen to make electricity and water. The electricity is then used to make the car go in the same way that an electric car goes. (A normal electric car uses a big battery to hold its electricity instead.) The water is released as exhaust.
The problems with hydrogen cars are that A] hydrogen is expensive to produce, B] pure hydrogen tends to leak out of containers over time, even if you use thick metal walls, and C] hydrogen explodes if you mix it with air. These combined make them not a great choice for cars. At least until someone finds a way to fix all of those problems.
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