That outlook is way too bleak. As a person who has taught at universities for fifteen years and has run lots of open educational formats and infrastructure with other public institutions and citizen groups, my experience is the opposite. If anything, the desire to learn and curiosity are among the strongest common traits humans possess. Grades are just a tool and a proxy that most people working in formalized educational settings have to work with at specific points.
Motivation can come from many sources, not only grading, e.g. individual encouragement, exciting applications, day-to-day relevance, interest shown by peers. Also students can just be intrinsically motivated.
It may come in different styles. But what do you do with students who don’t have motivation beyond grading/punishment? Some people just do not have motivation unless somebody standing by them with a stick.
Pretty strong opinion that overlooks all those students that study or attend courses specifically to learn.