That’s called a hydraulic drive system, and yes, for specialized equipment (exotic tractors and such) they do exist today. However, one must have a pump to pump the fluid to the hydraulic motors at the wheels.
The mechanical advantage of hydraulics is that there is very little efficiency loss, between the pump and the hydraulic motors, like there is with a traditional engine. I believe the hydraulic tractors that I’ve seen use a traditional diesel engine to drive the hydraulic pump. Much more of that horsepower will go to the wheels than is normally possible.
I think high speed operations are difficult for hydraulic drive vehicals though, and, they simply aren’t practical for a modern automobile.
Personally, I think the high efficiency diesels coming out of Germany, Sweden and Japan are the way to go. I rented one in Germany in ‘06, and that VW Golf performed as well or better than a gasoline powered version. They don’t stink, soot or accelerate slow like the old diesel cars we all remember from the ‘70s and ‘80s—apparently due primarily to advanced electronic controls.
Your probably right mate...I am not a bit technical on this subject and I bow to the wisdom of others. All I do know is that I saw it happen with my own eyes and it seemed a damn good idea even back then.. when gas was about 10c a gallon.