As the other poster mentioned, X11 used to run on really old resource-constrained systems. Nothing about it precludes using it for embedded automotive applications. A tiny MCU could manage it. The MCUs used for current automotive stuff are powerful enough to run Linux with Vulkan for crying out loud.
Though I think for many of these embedded applications both X11 and Wayland are overkill when EGL direct works just fine. A full windowing system is massive overkill.
Because the problem isn't with X, it's that all the toolkits people want to use were written basically to use X as a glorified framebuffer. Wayland is a reorienting of the underlying stack to accomodate this. You could absolutely make an automotive stack with something like X and Motif, but nobody in the industry really wants to use those tools.
Most embedded graphical Linux applications don't use X (X Windows System), instead they use framebuffer directly or any library such as Qt Widgets or QtQuick/Qml that draws on top of the framebuffer device file. So, there is no need for developing a new Window system that can work on both Desktop or embedded systems.
