The number of items is not a problem per se; it only adds some memory requirement, as said, but a light one. Tens of thousands of items are normally managed by production LS applications.
The heavy part can be the management of the update flow, particularly for the client, if it has to plot all positions of all cars. But this load is the same, regardless that the updates are related with multiple items or always the same.

Your proposal is also feasible; if I understand correctly, there is a single item with fixed fields which multiplexes the updates of the various cars. This can be done with DISTINCT mode, which (unlike MERGE mode) ensures that different updates are never conflated (so, if you update a car and omit a field, this field will not be filled with the previous update, which can refer to a different car).
Obviously, this is suitable for the clients which want to see all cars, not for clients interested in a single car.
The problem is that, if the overall flow is too heavy for the client and you try to leverage the frequency limit offered by Lightstreamer to resample the data, there is no guarantee that some car won't have all its updates filtered out. On the other hand, with separate items, if you set frequency limits on each, the Server applies a round-robin behavior.

Let me stress that even with one item per car there is no need for the client to explicitly subscribe to all cars.
The simplest thing to do is getting the list of cars from the Server as well, by using "two-level push". This is shown in our portfolio demo, which is similar, as you actually manage portfolios of cars.
This implies some work on the client side, to get the list of cars and subscribe to each car, but this is handled by Lightstreamer Web Client library, which supports two-level push directly, as the demo subscripion code shows.
Under the hood, all single subscriptions for each car still take place and this may be inefficient; but the figures involved should be manageable. Should scalability requirements come, a more complicated strategy could be devised.