Traditional policy prescriptions for transportation efficiency have been largely misguided. With smarter legislation, the auto industry can restore competitiveness, boost profits, and displace oil use. The economic burden of high oil prices, concerns of supply and security, and environmental impact are justifiable reasons for state governments to act now. This report lays out several plans for state governments to pursue profitably. These plans include providing incentives to drivers of alternative-fuel vehicles and hybrid vehicles, mandating state procurement of efficient vehicles, adopt a labeling program for low-rolling-resistance tires, requiring pay-at-the-pump insurance, and the establishment of a feebate program.