Wheels are still used for legal telemetry: speedometer and odometer.

The legal requirements on that (in most places) are that the speedometer is in something like a -0%/+10% range, i.e. never shows lower than you're actually driving. Not only is that not helpful for navigation (but you could compensate that/shift the error window), but the precision is also pretty low (which you can't easily compensate).

(There are two precision problems here — tyre diameter changes slighly while you're driving, but also it's not precise to begin with before you even turn on the car, due to tyre wear.)

You'd need to do something like calibrating wheel speed data while you have good GNSS reception, then you could use it for dead reckoning. But accelerometers and gyros are cheap…

P.S.: I didn't say wheel speed data isn't used, just that it wouldn't be precise enough on its own.