I am having the same problem. According to Onstar I do not need a wireless plan for wireless Android auto, only Blue tooth
The fact is that Android auto uses internet connectivity for many of its features, such as Google assistant.
It's true that you do not need to pay OnStar for wireless data
in that case the wireless data needs to come from your wireless phone provider. The data connection has to come from somewhere.
If you manage to get Android Auto to run without any wireless data connectivity at all, then many of the features will have no way to function.
Most connections between phones and car radios use Bluetooth. This is how most hands-free calling implementations work, and you can also stream music over Bluetooth. However, Bluetooth connections don't have the bandwidth required by Android Auto Wireless.
In order to achieve a wireless connection between your phone and your car, Android Auto Wireless taps into the Wi-Fi functionality of your phone and your car radio. That means it only works with vehicles that have Wi-Fi functionality.
However, Android Auto can use bluetooth to help establish the WiFi connection as well as to function as an ancillary connection in addition to the WiFi.
There's a shocking amount of misunderstanding and misinformation about this technology.