How about the State requiring each car owner to have insurance which would cover to $X all damage caused by the car AND the State also limit claims to $X.[1]
The insurance companies with their phalanxes of clever quants can work out how dangerous each car model is and price it accordingly. Adam Smith's invisible hand can do the rest.
If the insurance companies get greedy and "certainly not conspire" to price high, then the car makers would be free to spin up their own correctly priced insurance companies and take the business in order allow car sales.
[1] Barring malice and probably a dozen other exceptions.
The insurance companies with their phalanxes of clever quants can work out how dangerous each car model is and price it accordingly. Adam Smith's invisible hand can do the rest.
If the insurance companies get greedy and "certainly not conspire" to price high, then the car makers would be free to spin up their own correctly priced insurance companies and take the business in order allow car sales.
[1] Barring malice and probably a dozen other exceptions.