It's more like "feel-good being the enemy of the good". Without other good policies, a more efficient car has ~zero expected benefit. With the other good policies, the more efficient car is marginally relevant.
The bizarro world where improved efficiency of coal use led to more coal use, rather than people miraculously keeping the same pattern of behavior despite the increased utility of using coal?
The bizarro world where nobody ever increases their fuel use in response to its greater effectiveness of use?
The bizarro world where people can feel like they've said something insightful simply because they're advocating greater fuel efficiency regardless of how poorly they understand the system in which it operates?
If your goal is purely to reduce amount of oil being burned, then making it impractically expensive to use oil-burning machines works. Making them extremely inefficient is one way to go about this.
Pure, unadulterated feel-good-ism.