People are joking about how this is trains or busses, but I think you hit on something fundamental:

- engine tech is now such that we no longer need one huge engine and lots of passenger to get good efficiency: many small engines works just as well.

- removing the need for everyone to stop where any one person needs to go ("bus stop") improves the experience drastically.

- the one remaining problem is density: cars would have to shrink a lot before they can reach the density of busses or trains.

So perhaps: a single-lane highway only accessible to self-driving vehicles driving in formation and where the vehicles must be below some specified size.

This gives us great last-mile experience, high throughput, and good safety.