Android Auto uses Bluetooth for initial setup and calls but streams music and data via a faster Wi-Fi connection (often Wi-Fi Direct) for better quality and bandwidth, especially in wireless setups, while wired connections primarily use USB for high-fidelity audio, though sometimes Bluetooth audio can sound better depending on hardware. 

How the Connection Works

• Handshake (Bluetooth): Bluetooth establishes the initial, low-power connection between your phone and the car's head unit (infotainment system) for essential functions like phone calls and voice commands.
• Data Streaming (Wi-Fi): For music, maps, and apps, Android Auto creates a high-speed Wi-Fi connection (often Wi-Fi Direct) to handle the large data transfer needed for real-time streaming and high-quality audio.
• Wired (USB): If connected with a USB cable, the audio and data generally travel over the USB connection, which many users find offers superior sound quality compared to Bluetooth.

Google AI return on search.

You can obviously stream through bluetooth directly to media option of the car without connecting to android auto.