I'm not sure they make this any more but Kenwood's Music Keg played FLACs. Not sure why this type thing didn't catch on.
The KHD-C710 Kenwood Music Keg lets you enjoy a huge music collection in your car - its transportable 10GB DMS cartridge can hold up to 2,500 of your songs at standard MP3 compression - as easily as playing CDs or listening to the radio.The KHD-C710 includes Kenwood PhatNoise Music Manager PC software, a USB docking cradle that connects to your PC and can be used with multiple computers, a 10GB DMS cartridge featuring internal shock-absorbing suspension and the Kenwood Music Keg unit. The Music Manager software makes it easy to rip and collect music on your computer in MP3, WMA, WAV and FLAC formats, and it even lets you get audiobooks and other spoken-word files from Audible.com. You can organize them all into custom playlists, and Music Manager's Dynamic Playlist capability will even automatically update the playlists as you get new music. Then insert the DMS cartridge into the docking cradle and transfer your music. The DMS cartridge is small enough to fit in your shirt pocket, so bringing your collection to your car couldn't be easier. The Kenwood Music Keg unit installs and connects just like a CD changer - simply insert the cartridge and you're ready to roll. The KHD-C710 is compatible with most 2002 and many 2001 - 1998 Kenwood in-dash receivers, or use the KCA-R70FM adapter and you can add the KHD-C710 to any car stereo that has an FM radio.