Android Auto is officially saying goodbye to the version that runs directly on your phone, as it becomes an "available only for car displays" experience.
Android Auto was first released in 2015 in an attempt to turn your phone into a full-fledged car navigation system, distraction-free and all. In typical Google fashion, the Android app is now being retired with a message appearing in Android Auto for Phone Screens that says, “Android Auto for phone screens will stop working soon.”.
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Now, the story behind Google’s offering of Android Auto for phones is a strange one. When the service launched, it was available for navigation/entertainment and phones. Then, a little later, Google decided to limit the experience to car systems only, but had to offer a replacement for phones – hence, Android Auto for Phone Screens was born.
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Google has now decided that this app is unnecessary and, in order to focus on Google Assistant Driving Mode, is disabling the former. People are reporting that the app is not compatible with Android 12 devices with a message saying “Android Auto is now only available for car displays,” and the shutdown extends to older Android versions as well.

Google Assistant Driving Mode vs. Android Auto
Well, Android Auto will continue to work on dedicated car infotainment and navigation systems, and Driving Mode will be the replacement on phones . It makes sense, as what this feature offers is basically the same as Android Auto – large UI elements, music services , etc.
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However, there are still a few things missing from Driving Mode to make it a complete replacement. For example, there's no way to use it in Landscape mode, there's no dedicated app icon (the only way to launch it is to say "Hey Google, start Driving Mode"), and there are some missing elements from the music experience.
However, we believe that Google will slowly improve the experience with updates and make using Driving Mode much easier.
Information source: phonearena.com
