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To reasonably look at the "cost" of this or any other fuel, you have to look at how much energy is expended to make the fuel-- turn the water into H and O2. Ain't no free ride.
While the product of combustion IS water, I suspect that a reasonable amount of fossil fuel was burned to produce the electricity to separate the molecules.
Each time you change forms of energy (fossil fuel to electricity to chemical reaction ((separating water into H and O2)) to burning it in the vehicle engine) there is a loss of efficiency that is converted to heat.
Were the news media interested in FACTS instead of sensationalism, they would look at the whole process and report on the total efficiency. But it would not make such a great story as "car burns water".