I should also mention that in regards to the market not demanding a product so why development it, one could say there was no demand for the iPhone either until Apple & Steve Jobs came out and told everyone this is what they wanted.
But even that was WAY more of a stretch than self-driving cars.
We have continually moved towards higher levels of automation with transportation. If you actually go read the research on how we've progressed from level 1 automation and beyond, it is clear that this is definitely something we will be seeing in the near future.
The biggest issue seems to be to collect the data, build the AI and develop the software. From a hardware perspective the sensors and mechanical aspects are available to implement self driving, but the computer still can't interpret everything properly.
Tesla is constantly releasing updates to their software, and again, if you had bothered paying attention the last few months, they are starting to move towards recognizing red lights, crosswalks, etc. Just another step towards full self-driving.
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