The externalities are all the costs of medical problems and deaths due to pollution, as well as reduced property values due to polluted areas being less desirable. For the former I’d say a ban is appropriate, unless you’re suggesting to somehow literally clean the polluted air and pay for it with a gas automobile tax.

I mean even campfires and smoking in public have negative externalities which cause cancer. The marginal cost of each is tiny and probably hard to price, but it has a price. Adding this price would slightly offset the cost but more importantly act as a disincentive for buying a polluting vehicle.