Are they really needed? Well no, if the proper systems are set up, its quite possible for most people to live without a car. See other parts of the world as proof.
But in North America things aren't set up like that, and introducing things like trains and subways is all but impossible now that we're mostly sprawled out in suburbs.
So, for the foreseeable future anybody in North America that does not live in a major city will need some sort of personal transportation.
Sure we need to be smarter about how we use it, people driving SUVs or vans and only ever having one person in it is stupid. But still, the way our world is set up we need cars.
So how about replacing gas? Current alternatives are simply not ready, and any government pushing is a stupid waste of time that will probably do more harm than good. Consider the huge push by environmentalists and politicians for ethanol. Oh, surprise, after pouring in billions of dollars it turns out that it was a MORONIC idea. It needs much more fuel to produce than it releases, it is literally impossible to ever grow enough corn for our needs, even if food production was completely stopped, and in the process we caused a humanitarian crisis by driving food prices through the roof.
Think about it - did the world need government incentives to switch from coal powered steam engines to diesel and electric, from candles to light bulbs, or from floppy disks to CDs? Superior technology is snapped up quite quickly once it is clearly better. If this choice is forced prematurely by the government.. well unfortunately they seem to have a track record for choosing wrong.
Similarly for electric cars and hybrids. Forget the hype, they will not save the world. Look up the ingredients of the batteries sometime - some of the most toxic chemicals around. And electric cars need literally hundreds of pounds or tons of batteries each to get any sort of reasonable range. These way a lot, and as everybody should know, the heavier a car is , the more energy it uses. These batteries are also expensive, and further, need to be replaced pretty often, for a LOT of $$$. And charging takes hours, so even if there were charge stations at every gas station, you better bring a PSP or something, because you'll be there a while.
Further, as already mentioned, most of our electricity is generated from fossil fuels, and the only alternative genuinely ready for prime time is nuclear, which most people don't want. But even if we switched to renewable energy (and the required capacity would be massive if there was a large scale switch to electric cars), there's still lots of inefficiency. Huge amounts of power are lost carrying it from the power station to your house.
Sure, you could have an electric car despite all this for every day driving, but then what about longer trips? Should you keep two cars just in case?
Hydrogen may someday be a solution (though again we need to find a cheap way of generating other than the current method of getting it from natural gas) because it is perfectly clean yet can be used much like gasoline currently is. Unfortunately this technology is getting much less attention than electric.