Furthermore, when car ownership is no longer considered a necessity (as it is today in most of the US), the economics will change. Right now, my personal vehicle is a sunk cost, so I view car trips as costing close to zero—unlike the up-front, immediate transactions inherent to taking the bus or Lyft. Once I no longer own that vehicle (I'm not planning to replace it), all of my options will be on more equal footing, since they'll all be priced per-trip. Even self-driving vehicles will not be able to compete with mass transit when they're both priced similarly.
I think there's likely to end up being a third option: Public transport with self-driving cars for last mile at each end. That way you have the convenience of door-to-door, combined with the efficiency of mass transit for the bulk of traffic.
There are also other advantages, like it expands the effective catchment area of stations, making them more viable even at lower densities. And the cars themselves can be much smaller and more efficient as well, since they don't need the range, and they don't need to be as comfortable if people are only sitting in them for ~5mins.
And maybe a fourth one: self-driving road based mass-transit (autonomous buses basically).
I would also guess public transportation will evolve as well. I could see small and medium sized cities getting rid of buses, fixed schedules, and fixed routes and instead deploy a fleet of van-sized vehicles to pick up people on demand. I could see this as being something that gets outsourced to Uber and Lyft. Maybe it will be less expensive and better to just subsidize rides from private companies.
The cars (eventually) will not be like current cars. If they don't crash, they don't need as many safety features. They can be made much lighter and from cheaper materials. When the car is way lighter, it can use a smaller, simpler drivetrain. They will likely be electric. Maintenance on electric cars is far less than gasoline or diesel vehicles. Your robot car will likely be serviced by another robot.
Don't think of a Lexus with an instrument package bolted to the roof, think about adding a few hundred dollars of sensors and actuators on a fancy golf cart. I wouldn't be surprised if self driving cars are eventually available for less than $10,000. I think the low cost of the vehicles combined with the low cost of operating them will result in an explosion of ownership, not a reduction. I think when the cost of the vehicle drops and the cost of a trip drops, more vehicles will be sold and more trips will be made.
PS: Adding a camera may get cheaper over time, that does not mean it's ever cheaper than not having one in the first place.
Mechanical and software failures will always be possible. However, we already accept a really high rate of death and injury when both could be eliminated. I don't think that will change with self-driving cars.
Adding a camera is cheaper when it results in being able to eliminate hundreds of pounds of metal and airbags. We don't make bus riders wear a seatbelt because it just doesn't solve a huge problem. When the injury rate of car passengers gets to a similar level, we probably don't need seatbelts there either.
Cars last for ~25 years in normal use (average car in US is 11.5 years old and accidents take many out before reaching their lifespan). So, at a minimum we are talking 50 years before essentially every car is even capable of being self driven. Laws are unlikely to change before self driving goes from a novelty to assumed behavior call it another 25 years at a minimum. Now, add a few more years for phasing in the law, and then a few more for statistics to validate reducing safty equipment.
So, 100+ seems fairly optimistic as that's the happy path assuming zero major issues show up.
It really remains to be seen what self driving cars would do to traffic.
The more I hear about self driving cars the more I wish the US government would take investment into public transportation seriously.
Maybe self driving cars will help. But I see that being a thing for those who can already afford to live in the city. These people are going to likely prefer new stock over run down hoods.
I, for one, plan on moving further out of the city as soon as my car can drive itself. The dream isn't dying. It hasn't even started yet.