Vienna has been doing this for decades. The closer to downtown, the more streets are turned into pedestrian only areas. 30 years ago most of the major streets downtown had cars and/or parking. Not anymore.

The "carrot" to the "stick" above is that Vienna has been constantly expanding and improving public transportation, as well as expanding bike lanes. A majority of Vienna trams and buses are electric and an ever increasing amount of that electricity comes from renewable energy.

My wife and I don't live directly downtown anymore, but we either walk, bike or use public transportation most of the time. For me 90% bike or walk, 5% public, 5% drive. We sold our second car years ago because it is so much more convenient to use alternative methods for 90% of our travel.

The massive expansion in public transportation provides other dividends. Fewer cars means less noise and air polution. Vienna is full of beautiful old sandstone buildings that turn black from car exhaust. Fewer cars means less wear and tear on roads, reducing maintenance costs. Better traffic flow is better for GDP, because people spend fewer hours per year stuck in traffic jams.

For me the bonus is four-fold. Biking is great exercise. With fewer cars it is nicer to bike and look at the beautiful city. I save time and money because biking is faster than driving pretty much anywhere in the city, and certainly cheaper.