The compressed air engine has some environmental advantages over competing technologies as well.  There are no battery disposal issues that an electric vehicle would have.  The vehicles will remain operational longer since the engine has far fewer parts and very few moving parts. Thus disposal of car parts should occur less often. The lighter weight implies that the tires will last longer and tires are a major disposal concern.

Indian manufacturer Tata Motors is planning a limited production run of compressed air vehicles for use in India and a few other countries. It is expected that the top-speed for this vehicle will be 68 mph with a range of 125 miles. The tanks containing the compressed air can be refilled at special stations, or using the on-board electric compressor in 3-4 hours.  Unfortunately, this particular car model will not meet U.S. safety standards primarily due to the construction of the vehicle.  It should also be mentioned that production startup was scheduled for the summer of 2008 but I haven't heard anything further. (There is a history of missed delivery dates for compressed-air cars.)

Moteur Development International (MDI), the French manufacturer of compressed air vehicles, and Zero Pollution Motors (ZPM) are planning a larger vehicle for the U.S. market in 2010. Rumours are flying that the car may have a range of 1000 miles utilizing a dual energy source.     The Mexican government has ordered 40,000 air powered vehicles to be used as taxis in Mexico City.

Although the compressed air car solution sounds like a godsend there are some disadvantages.   First of all, use of air compression to store energy is not particularly efficient.  Second disadvantage is that the required air pressure is significantly higher than what is provided at a typical gas station for filling tires.  Electricity is required to fill the tank and thus the carbon emissions problem is transferred from the vehicle to the electric power plant.  It could take up to 4 hours for a refill at home through the electrical grid (although this could often be done during off-hours at night).   Using a high pressure air pump this time could be reduced to approximately 3 minutes.  It all comes down to availability of high pressure air pumps.  The infrastructure is not there for mass use at the present time.  Another problem is that the Air Car suffers with low temperature usage.  These cars likely won’t be used in cold weather climates.  The final concern is the safety of driving around with compressed air tanks. (But better compressed air than hydrogen.)

NOTE:  There are several companies actively developing compressed air engine technologies, too many to mention here.  Wikipedia has an excellent summary of the air-compression car companies along with advantages/disadvantages of the technology.