I believe it needs to have wifi and Bluetooth on in order to work
That is correct, the bluetooth connection itself doesn't have the bandwidth to support Android Auto or Carplay. That's why the car in question needs to support the internal wifi network, which Uconnect5 does. It has nothing to do with the Wifi Hotspot, though, the phone doesn't have to be connected to that to make wireless Android Auto work. Both connections (BT and cable/wifi) are required, though, it won't work if one of them is disconnected.
I did find a solution of sorts, seems that the installation on my Pixel had some issues, so I cleared all of the Android Auto data and tried again. Now it works.