WSJ.com: GM, Segway to Make Vehicle

General Motors Corp. is teaming with Segway Inc., maker of the upright, self-balancing scooters, to build a new type of two-wheeled vehicle designed to move easily through congested urban streets.

The machine, which GM says it aims to develop by 2012, would run on batteries and use wireless technology to avoid traffic backups and navigate cities.

The problem with a vehicle like this is similar to the issues with the Segway.  Where are you going to drive it?  You can't drive it on sidewalks and when it's in the road you're going to be driving against trucks and SUV's.  Something like this won't take off until you dedicate separate lanes for ultra-small vehicles.

UPDATE:
Some cool pictures and prototype video on the NYTimes website.