You're pushing for a technical solution that ignores political problems. The political effort to even get this to the planning stage is already astronomical. Then you get into the endless committees, finding a mayor with the cojones to confront his constituency with the up-front costs, somehow keeping everything compatible between each and every city you do this in (because each will be done by different contractors, each with their own ballooning expenses - 10x cost is not uncommon), and hoping to god the other cities don't get cold feet after watching the vanguard get eaten alive come election day for blowing through $5 billion or more (did I mention ballooning costs?). And then of course there's coordinating with the car companies...
The fact is, autonomous cars as they're being done now will win by default, because besides the already huge political momentum they have, they also involve little-to-no cost for municipalities. Private companies pick up the R&D tab.