No, actually it's not. That's nonsense.
You can buy today a 5 hp 4 stroke outboard engine, weighing about 25 kg (including transmission, housing, controls etc), for $1300 brand new.
http://www.ebay.com/bhp/5-hp-outboard-motor
Furthermore, what you are proposing is not new: a tiny car with a tiny engine for one person. That's called a microcar. Wikipedia has a long list of these, starting from the 1950's onward to today, some of which have sold in quite large numbers:
https://en.wikipedia.org/wiki/Microcar
A modern, electric example is the Reva (G-Wiz in the UK), which was produced from 2001 to 2012.
https://en.wikipedia.org/wiki/REVAi
Given that these already exist, why are they not the solution to our problems? For one, they're well-documented death traps. They use a loophole by classifying as a four wheel motorbike, meaning they don't need to be crash tested. Also, they are a replacement for only a small part of what a real car does, and this is the part that's also most easily replaced by public transport.
Your right. And, that outboard you linked to would be even cheaper if it were the motor only.
To add to this, here's[1] a video of a tiny 4-stroke engine.
And here's a video of a tiny V8 4-stroke engine[2] that "sounds like a big American V8".
I think cars being as large as they are has absolutely nothing to do with a size of the engine. There are some cars with absolutely tiny 4-stroke engines and they are still "large" because anything smaller would be unstable on the road. You can't make a cabin for a single person on 4 wheels, because it will fall over in any turn - you have to make it a motorcycle, or a tricycle - and you are losing a lot of things that make a car a car at that point. Not to mention the fact that I don't want my car to be a tin can - I want to be comfortable.
That's fair enough, but many people will enjoy having access to economical transport without sinking tens of thousands of dollars in to a depreciating asset.
And while people sometimes appreciate a lot of space in a car, most often, when they commute , they might not need that.
In ~15 years of car ownership, I have never owned a car less than 10 years old, and I don't understand this at all. Currently I drive a 2002 Peugeot 307. Regular maintenance costs me less per year than the depreciation cost alone on a new car, and I've never had a breakdown that's left me stranded. Not once.
But anyway, my point is exactly what you say: the risk of having a breakdown is small enough for any well-maintained car that it's pretty independent of car age.
I have always been surprised that car manufacturers haven't done a better job of rolling regular maintenance expenses into the initial cost of a car (and thus, into the financing arrangements that support most new-car purchases), because doing so would appear to be something of a win-win: a more reliable car for the consumer and also a more reliable-seeming car for the manufacturer to tout. But I think the mandated separation of auto manufacturers from retailers and servicers in the US tends to conspire against this.
Our experiences differ. In my own, they own a car. They just wind up impoverished as a result.
The only exception is in places with good public transport and cycling/walking infrastructure in human-scale development, but those places tend to be pretty pricey.
If you can let your self-driving car drive uber and get you something like $10/hour while you are at work, I think some people would do this.
For example, just adding supercaps means you could recover 20 to 30% of your energy from regenerative braking. This will happen when tech is ready(cheap in big quantities), and it is getting ready. It is not just Tesla, but hundreds of companies working on those problems.
But also, the real shock is making cars self drive because suddenly your cars do not need to stay in a static place for hours in cities. Today cars carry an average of 1.1 to 1.05 people in cities, but are made to carry 5 to 6 people, they weight over 1500kilograms for moving 80 kilos.
If you can make cars 5/6 smaller like you can easily do with electric(it is very hard to make a small 4 stroke engine) you can improve enormously the efficiency and reduce contamination of cities.