Self driving taxis should absolutely be cheaper to use than current regular cars.
Because they don't need a steering wheel, backseat, and many other things. They can also run close to 24/7.
How "massive" the price drop becomes I don't date to guess though.
> They can also run close to 24/7.
In practice, if you provide enough cars to meet the demand to travel from suburbs to city at 7am-9am and back again 8 hours later, I’d expect a large fraction of them to be idle outside of peak hours. And even at peak hours, to be spending half their time empty, as almost all the demand is in one direction.
And if you don’t provide enough capacity to meet rush hour demand? Good luck convincing people to give up their cars.
You're right that travel demand is impossibly uneven for a 24/7 taxi fleet.
My best answer is that they can deliver goods/packages in the off hours.
That may even end up being the main business.