Google X Is About Driverless Cars
Driverless cars are of course something they are likely working on...BUT I believe they are working on far more than the Prius we've seen before. I think it is quite likely they are developing a simpler (in terms of consumer-facing aspects) technology that can easily be integrated into cars at production. The point of this system would be to allow cars to run themselves, but to also assist. By learning more and more and reporting that data back to Google, the cars become a source of machine learning. Think SIRI for driving. The more miles driven, the better it gets. Even cars that aren't actively being auto-driven may have the system operational to plan how it *would* act and log that vs. the actions of the driver. By comparing the two, they get better at it exponentially faster.
Still not convinced? Think about it this way: Google is a company about data and they want to gather as much as humanly possible. By gathering millions upon millions of miles driven each month, their systems would be the best way to drive. They would have a lead no competitor could match, bar none, and would become an essential part of every car.