The point of this idea is that housing is expensive to build and one way to significantly reduce that cost is by eliminating parking. Add to the cost of car ownership and the cost of living is substantially higher.
Most people still will need a car to get around. Bus rail and carpooling are not real solutions for most people in urban USA cities. Some feel offended by this notion, but it's reality.
I imagine that the concept of cities leasing waymos and being able to allocate them around to particular nodes will increase the avg. passenger capacity as well, because it can be modeled and tracked to figure out where the nodes need to be to create an effective network with high utilization.
But yes, traffic is indeed an impact.
The government can also lease vehicles with more capacity, like mini-busses if that's the policy objective. Doesn't have to be cars. The government would be in the driver's seat to drive this driverless policy as well, no pun intended